As with conventional loan options, homeowners who are veterans, active-duty service members, or the spouse of someone who has passed in a military-affiliated capacity can choose to refinance on a VA loan to put themselves in a better position financially. This can be accomplished by lowering a rate or payment on a loan, changing your loan term, taking cash out of a home, putting cash into a home, or using the built-in equity from your home to consolidate on other private debts or to do a home renovation.

When looking to refinance on a loan, military service affiliates will want to calculate costs and fees associated with the process. Hero Loan will give you an overview of the input variables used when working with a VA refinance calculating tool and an explanation of what they entail or indicate below.

What is a VA Refinance Calculator?

With interest rates reaching historical lows, it is no wonder many homeowners are considering if a home loan refinance is a sensible option for themselves financially. A VA refinance calculator is an effective tool to use in making sure the math makes sense in whether or not it is in a homeowner’s best interest to refinance on a loan.

A VA loan calculator should provide a comparison of the variables used to calculate your original VA loan amount, which includes: the original loan amount, the loan term (typically in increments of 15 or 30 years), origination of the loan date, and your current interest rate on the loan. A VA refinance calculator will calculate monthly costs by inputting the type of refinance loan that the homebuyer is interested in, the new loan term, a new interest rate, and your credit score.

Combat-related disability will also factor into a refinance option on a VA loan. Once these variables are plugged into the VA calculator, a cross-comparison will show you the adjustment that indicates your savings in your monthly payment and the amount of time it will take to break even on the loan.

What Costs and Fees Should I Be Aware of When Considering a VA Loan Refinance?

For military-service affiliates considering a VA loan refinance, there are several costs and fees to be aware of when calculating for an adjustment on a loan. You’ll want to keep the following things in mind when determining if refinancing on a loan is the right financial option for you:

Funding fee. This fee is a one-time charge that can be paid upfront or rolled into the mortgage. The funding fee supports the VA’s loan guarantee to lenders, which asserts that the VA loan program will continue to ensure a portion of the loan will be repaid regardless of if the borrower defaults. This guarantee not only keeps the VA program in orbit so other military service affiliates may benefit from this program, but it also allows lending requirements to offer more favorable, lenient terms to veteran home buyers.
Appraisal fee. The VA already requires an appraisal when a lender issues the initial loan on a house. However, an appraisal will be required again to get a VA cash-out refinance, but may not be required for a VA streamline refinance. This is because your lender will need to determine the amount of equity built into the house and calculate an appropriate value-to-loan ratio for how much cash the homeowner can take out in a cash-out refinance. At Hero Loan, we are committed to always paying for your appraisal fee!
Lender origination fees. This is a flat-rate fee of loan-related charges issued by your lender. It covers the costs of the lender to prepare your loan and will not exceed more than 1% of the loan amount.
Rate Discount Points. Also known as mortgage points, discount points lower your interest rate in exchange paying for an upfront fee. In exchange for accepting a higher interest rate, lender credits will also lower your closing costs. For borrowers, the more you’re willing to pay, the lower your interest rate. One full discount point is equivalent to 1% of your loan amount. For instance, if a home buyer is borrowing for a loan amount of $250,000, one discount point will cost you $2,500. It is also possible to buy partial discount points.
Title Fees. This fee varies by location, the purchasing price of the home, and the total loan amount. The title report and title insurance provide protection for the lender and homeowner in case someone claims and wins ownership rights to the house in a court of law. In the outcome of this case, the title insurance company would reimburse the lender and owner of the home for the loss.

Other costs may include a recording fee, credit report fee, survey fee, flood certification, and attorney fees. These costs typically range from 3 to 5% on the total amount on a loan refinance and vary depending on your lender’s requirements. The majority of these costs can be rolled into the new loan amount (versus being paid upfront in a lump sum), keeping a refinance option within the realm of feasibility. However, that is why homeowners will also want to be mindful of their break-even point to ensure that refinancing on their VA loan will ultimately be worth it by putting them in a better position financially.

How Soon Can I Refinance?

The window of opportunity to refinance on a VA loan varies by lender, but there are some predictable averages to expect within that variance. Typically, homeowners will need to have made at least six monthly payments on the loan being refinanced. Additionally, the note date of the refinance loan will usually need to be at least 210 days or more after the date the first mortgage payment was due on the loan being refinanced. Regardless of the refinance loan type — a VA cash-out refinance or a VA Interest Rate Reduction Refinance Loan, aka IRRRL — these requirements apply across the board with your lender.

What Are Some Refinancing Options?

When applying for a VA refinance loan benefit, there are two options for homeowners to consider: a VA Streamline (IRRRL) or a Cash-Out Refinance. Compare your options below to see if a VA IRRRL or Cash-Out Refinance option suits your financial needs better:

VA Streamline (IRRRL) Features:

For existing VA home loans (ARM or fixed-rate)
For primary, secondary, or investment properties
No cash out
0.5% funding fee
No appraisal required

You Should Choose a VA IRRRL to:

Lower the rate on your loan
Change the term on your loan
Move from an ARM to a fixed-rate mortgage

Cash-Out Features:

For existing VA and non-VA home loans
Must be primary residence
Pull cash from equity
Regular funding fees apply. 2.3% first-use, 3.6% all future uses.
VA Appraisal required

You Should Choose a VA Cash-Out to:

Consolidate on private loan debt
Make home improvements
Reduce the rate or term on your loan

How Can The Home Loan Expert Help?

Hero Loan, The Home Loan Expert’s VA Loan Program. Our veterans, military service members, and their families deserve a lending service provider who will meet them with the same level of passion and dedication they showed in their willingness to serve this country.

Apart from the outstanding lending services we provide for our military service affiliates, we are proud to show our appreciation by supporting veteran-owned businesses and events. We believe giving back is the cornerstone of creating a thriving community that takes care of each other, and we are glad to support the efforts of the Fisher House Foundation. This project gives back to veterans and their families by providing complimentary housing for veterans or active-service military members undergoing medical treatments.

Our personalized, face-to-face approach ensures that our clients’ needs are seen and heard when it comes to finding a refinancing solution that will make monthly payments more manageable. Hero Loan’s professional and efficient services can help our clients qualify for a loan in minutes, with closing periods in as little as 14 days. Thanks to our ability to streamline the underwriting process in-house, we are able to expedite the refinance process and take the hassle out of loan application paperwork.

Call us today at 800-991-6494 to speak with a VA loan representative who will gladly help you calculate if refinancing on your VA loan is the best decision for you and your family, financially speaking. You can also reach out to one of our friendly lending experts, through our application to get an idea of your VA loan refinance savings today.

VA Refinance Calculator