The VA Refinance Loan

You own a home now, so you are probablyt familiar with the mortgage process. If you've never refinanced with a VA loan, you might think that it's more complicated. In reality, a VA Refinance Loan is really no more difficult than than refinancing with any other loan.

What types of refinance programs does VA offer?
There are three main types of VA Refinance Loans.

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.

Cash-Out Refinance
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. With a VA Cash Out Refinance, you access up to 90% of your homes value to pay off your high interest debt or get cash to use any way you choose to.

Streamline Refinance (IRRRL)
The VA Streamline Refinance is designed to lower VA refinance rates on a current VA mortgage or convert a current VA adjustable rate mortgage into a fixed rate. A Streamline VA Refinance Loan 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.

How much can I refinance?
The maximum amount for a VA Refinance Loan is determined by:

Maximum Loan Amount: The maximum loan amount allowed for a VA Mortgage varies from county to county. The highest maximum VA Mortgage right now is $1,094,625. The lowest maximum VA Mortgage 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 page http://www.homeloans.va.gov/docs/2009_county_loan_limits.pdf. This site lists U.S. territories as well as states.

Maximum Financing: Depending on the state where the property is located, the maximum VA financing for a VA Rate/Term Refinance (No Cash-Out) or VA Streamline Refinance (No Cash-Out) will be 100% of the appraised value of the home or its selling price, whichever is lower. The maximum financing for a VA Cash-Out Refinance is 90%.

What factors determine if I am eligible for a VA Refinance Loan?
VA refinance guidelines use 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 refinance guidelines also use 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. Your credit background will be fairly considered. At least a 620 FICO credit score is very helpful to obtain a VA approval. See more VA Refinance Loan Requirements.

Can I get a VA refinance loan 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 refinance loan. 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.

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.

Why choose a VA Mortgage?

VA Refinance can access up to 100% of your homes equity.
There are no prepayment penalties for a VA Mortgage.
VA Mortgages have no private mortgage insurance (PMI).
A VA Home Loan is eligible for an interest rate reduction loan, or "streamline" refinance.
A VA Refinance is available all areas of the country, provided a market exists for the property and the home meets HUD's minimum property standards.
A VA Home Loan may be used to purchase or refinance a new or existing one to four family home.
VA Mortgages are offered at terms of 15 or 30 years.

What types of VA Mortgages are available?

Fixed Rate Mortgage
Most VA mortgages are fixed-rate mortgages. In a fixed rate mortgage, your refinancing VA mortgage rates will stay the same for the entire loan period. With a fixed rate VA Mortgage, you always know exactly how much your monthly payment will be. The Daily VA Mortgage Rate is usually better a conforming 30 year fixed rate with no points and daily VA rate with points is even better. Contact us for today's free VA mortgage rates.

Adjustable Rate Mortgage
With VA's adjustable rate mortgage (ARM), the initial interest rate and monthly payments are low, but these may change during the life of the loan. VA uses the 1-Year Constant Maturity Treasury Index (1 Yr CMT), the most widely used index, to calculate the changes in interest rates.

The maximum amount that the interest rate that an ARM VA Mortgage may increase or decrease in any one year is 1 percentage point. Over the life of the loan, the maximum interest rate change is 5 percentage points over the initial interest rate.

I have already obtained one VA loan. Can I get another one?

Yes, your eligibility is reusable depending on the circumstances. Normally, if you have paid off your prior VA loan and disposed of the property, you can have your used eligibility restored for additional use. Also, on a one-time only basis, you may have your eligibility restored if your prior VA loan has been paid in full but you still own the property.