The VA Refinance Loan

If you already own a home, you're at somewhat familiar with the mortgage process. If you've never refinanced through a VA Loan before, you might think that it's more complicated. Well, you'll be pleasantly surprised to learn that a VA Refinance Loan is really no different than than the process of refinancing with any other loan. Of course, qualified veterans have many more protections through VA Mortgage Loans.

Did you know that you can refinance your current mortgage to a VA Home Loan to lower your monthly payments, take cash out of your home, consolidate your high-interest debt, and obtain a fixed-rate mortgage? Compare your VA Refinance Loan options with ENG Lending. It's Simple!

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, Subprime, FHA or USDA fixed rate or ARM mortgage and wish to refinance into a VA Mortgage. This program helps veterans who wish to have a stable, VA insured fixed rate mortgage.

Cash-Out Refinance
A Cash-Out VA Refinance Loan is perfect for the veteran who wants to access the equity that they have built up in their home. This program helps veterans 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 the interest rate on a current VA mortgage. A Streamline VA Refinance Loan can be performed quickly and easily.

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.

What are the advantages of a VA Refinance Loan versus a Conventional Loan?
VA Refinance Loans offer many benefits and protections that you won't find in other loans including:

VA Refinance Loans have Great Interest Rates
A distinct advantage of a VA mortgage, as compared to a conforming loan, is great interest rates, no down dayment and no mortgage insurance (MI). Depending on the program, the daily VA mortgage rates are usually better than a conforming 30-Year Fixed loan.

VA Refinance Loans Require Less Home Equity
VA Mortgages can access 100% of your homes equity. Other loan programs don't allow this.

VA Loans Dont Have Mortgage Insurance
There is no private mortgage insurance, but VA does charge a 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.

VA Streamlined Refinance and Assumable Loans
One of the most important advantages of a VA refinance loan is the ability for the loan to be assumed to qualified borrowers. Current VA loans are also eligible for an IRRRL or Streamline Refinance, that allows the borrower to easily refinance the loan to reduce their interest rate and lower their monthly payment.

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 monthly mortgage insurance.
A VA Home Loan is eligible for non-credit qualifying, Streamline Refinance or "IRRRL".
A VA Refinance is available all areas of the country, provided a market exists for the property and the home meets VA's property standards.
A VA Home Loan may be used to purchase or refinance a new or existing 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.

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.

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.