For veterans and active-duty service members, there are various options to consider when refinancing on a home loan. Included in those options is an FHA and VA streamline refinance. Each type of loan has its own merits to consider and should be chosen based on what will put each individual in a better financial position, such as by lowering your monthly payments or paying off a loan more quickly. Below, we will discuss what FHA and VA streamline refinance loans offer so you can make a decision that best suits your financial goals financially.
VA Streamline Refinance
A VA streamline refinance option is a simplified loan with relaxed qualifications for active-duty service members and veterans. It is also known as an Interest Rate Reduction Loan, or IRRRL. Because it does not require a VA appraisal or go through the typical underwriting process, borrowers are spared from excessive time spent on paperwork and fees that are usually associated with more traditional mortgage loans.
A VA IRRRL is popular with active and retired service members who are homeowners for several reasons. It allows them to:
- Refinance one VA mortgage into another
- Make an improvement on an already existing VA loan
- Qualify for a lower rate, or lower payment or both. This can be achieved by refinancing to a 15-year mortgage from a 30-year mortgage. Conversely, it is also possible for qualifying homeowners to reduce a 30-year term mortgage to a 15-year term mortgage to pay off the total loan amount faster.
- Switch from an adjustable rate mortgage to a fixed rate mortgage
As you can see, a VA streamline refinance option offers Veterans the chance to put themselves in a better position financially, with the added benefit of being much easier to navigate compared to regular VA loans. For those who are now interested in refinancing their VA loans through a streamline option, they should ensure that they are able to meet the eligibility qualification requirements.
- You must refinance using a Department of Veterans Affairs-approved lender
- You must refinance from an already existing VA loan to a VA streamline refinance loan
- You must obtain a Certificate of Eligibility (COE) from the original VA loan. Good news! One of our Loan Experts will handle this for you if needed.
- Your must get the approval from your lien holder that a first mortgage on your home takes precedence over a second mortgage (if you have one), so your new VA loan will be a first mortgage
- You must demonstrate that you occupied the home at one time
- You must be able to show that no more than one payment that was more than 30 days past due over the previous 12 months has occurred (although this can be overridden with assistance from your lender)
Lastly, you should also be aware of the VA funding fee, which allows for other veterans to benefit from this program by continuing its efforts and closing costs.
FHA Streamline Refinance
Although a VA streamline refinance option has many benefits for veterans, having a qualifying credit score may not always be possible. An FHA refinance, however, is an ideal option for borrowers with lower credit scores. It is the easiest way for veteran homeowners to refinance their home loans, as it does not require lenders to verify income or credit. Additionally, no home appraisal is required.
These are some of the other reasons to consider an FHA streamline refinance:
- You want to take cash out, but don’t have a high enough credit score for a conventional cash-out refinance
- You want to drop the interest rate on your 30-year mortgage
- You are looking to refinance from a 15-year home loan to a 30-year mortgage loan to lower monthly payments
- You want the option to choose between refinancing to a fixed rate or adjustable rate mortgage
- You are looking for a refinancing option that does not require employment or income verification
Veteran borrowers interested in an FHA streamline refinance should be aware of the following criteria:
- FHA refinance loans require an up-front mortgage insurance premium (UFMIP) and an annual mortgage insurance premium
- They are only available to borrowers who already have had an FHA loan for at least 6 months
- You have made your mortgage payments on time for the last six months.
- You can demonstrate that a streamline finance would financially benefit you
Finally, although the closing costs are cheaper for an FHA streamline refinance, this is still a consideration to keep in mind, in addition to the FHA mortgage insurance fee.
How Can The Home Loan Expert Help?
Hero Loan, The Home Loan Expert’s VA Loan Program. Our mission is not only to help borrowers refinance their homes to be in a better financial position, but also to give back as an integral part of our community. We are proud to address the needs of active-duty military and veteran homebuyers and homeowners with our outstanding customer service. We believe in giving back to our veterans beyond a home loan capacity and are proud to support the Fisher House Foundation, which directly gives back to our veterans.
You don’t need to worry about the hassle of filling out paperwork, as we are glad to complete it on your behalf. Our fast and efficient services can get you approved for a loan in less than five minutes, with closing periods in as little as 14 days.
Stop wondering if refinancing your VA loan is a viable option for you and your family. Give us a call at (866) 222-0219 to speak with a VA loan representative, who will be glad to guide you through the process of refinancing your VA loan. Our lending experts are also available through our live chat option and will be happy to address any inquiries.