VA Loan Refinance Requirements
VA Loans are Credit Flexible
The veteran does have to qualify income and credit wise, nevertheless, VA loan needs are not totally credit score driven. It's useful to have at the least a 620 FICO score to get an approval.
VA Loans have Great Interest Rates
A distinct advantage of a VA mortgage is great interest rates, no down dayment and no mortgage insurance (MI).
VA Loans don't require a down payment
VA Loans have no down payment requirement. Other loan programs don't allow this for veterans.
VA Loans Have No Mortgage Insurance
There is no private mortgage insurance, but VA does charge an up front VA funding fee, which may be financed. The exception to this is that if a veteran is in receipt of VA service connect disability payments each month, he or she does not have to pay a VA funding fee.
What factors determine if I am eligible for a VA Refinance?
To decide if you qualify for a VA Refinance Loan, we will look at:
- Your income and your monthly expenses. VA uses two methods for income qualification purposes. The primary method of evaluating a veteran's income is the residual income method and a 41%
total debt to income ratio.
- Your credit history (this is important, but VA's credit standards are flexible). A FICO score of 620 or above is very helpful in obtaining an approval.
- Your overall pattern rather than to individual problems you may have had.
As previously mentioned, VA uses two methods for income qualification purposes. The primary method of evaluating a veteran's income is the residual income method. Under this method, the underwriter determines that a veteran has sufficient income to cover day-to-day living expenses after paying housing expenses, taxes, and other debts such as car payments and credit card payments. VA also uses a debt-to-income ratio method like many programs. However, VA uses only one ratio (41%) which is the ratio of total debt (both housing and other debt) to income.
What is the maximum amount that I can borrow?
The maximum loan amount for a VA Loan qualification is determined by:
Maximum VA loan amount: By law, VA Lenders cannot insure loans that exceed certain amounts based on the metropolitan area or county in which you live. The highest maximum VA mortgage right now is $1,094,625. The lowest VA lender maximum amount available in any county is $417,000. To see what the limit is in the county in which you're interested, visit the following site http://www.homeloans.va.gov/docs/2009_county_loan_limits.pdf. This site lists U.S. territories as well as states.
Maximum financing: The maximum loan amount for a VA 100% refinance will be 100% of either the appraised value of the home. If you are refinancing and taking cash out, the loan will be limited to either 90% of the current appraised value.
Can I get a VA Loan Refinance after bankruptcy?
If you have been discharged from a Chapter 7 bankruptcy for two years or more, you are eligible to apply for a VA Loan Refinance. If you are in a Chapter 13 bankruptcy and have made all court approved payments on time and as agreed for at least one year, you are also eligible to make a VA loan application.
What types of refinance programs does VA offer?
There are three main types of VA Refinance.
VA Rate/Term Refinance
The VA Rate/Term Refinance is for borrowers who currently have a conventional fixed rate or ARM mortgage and wish to refinance into a VA Mortgage. This program helps borrowers who wish to have a stable, VA insured fixed rate mortgage.
A Cash Out VA Refinance Loan is perfect for the homeowner who wants to access the equity that they have built up in their home. This program is beneficial to homeowners whose property has increased in value since it was purchased.
The VA Streamline Refinance (IRRRL) is designed to lower the interest rate on a current VA mortgage or convert a current VA adjustable rate mortgage into a fixed rate. A Streamline VA Refinance can be performed quickly and easily. It requires much less hassle and paperwork than a normal refinance including no appraisal, no qualifying debt ratios and no income verification.
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