VA Loan Streamline Refinance
Uncle Sam is known for his red tape. While there is often good reason for regulations to prevent abuse and ensure fairness, many average citizens assume that any interaction with the government will be complicated and take a long time. If you want to refinance your VA loan, streamline refinance loans are a pleasant surprise. The VA has few regulations that govern these loans and, with the help of an approved VA lender, you can often get one in only 10 days.
That’s right! If you have an interest rates that’s a few points higher than the current going rate of 3.5 to 4.5%, today you can trade it in for a loan with a lower interest rate. The loan lacks the broader features of VA cash out refinance loans, but if your goal is to obtain a lower interest rate and, as a result, lower payments, a VA streamline loan is for you.
New Proof Of Eligibility Not Required
When you first applied for your VA purchase loan, you had to provide paperwork to prove you were eligible for a VA loan. You obtain a Certificate of Eligibility once the VA verifies that you had served 90 days in wartime or 181 days in peace time, are currently serving in the military with 90 days of service under your belt, or in the reserves or National Guard for six years or more. You were also granted your eligibility papers if you were released due to hardship, at the request of the government, or because of a reduction in force, certain medical conditions, or disability. You may have been the un-remarried spouse of a military person taken prisoner of war, MIA, or killed or disabled in the line of duty. You do not have to prove your eligibility again. If there is any doubt, your lender can easily pull your certificate from the VA’s online records.
To qualify for the loan, you also had to provide a number of documents, meet credit requirements, and have an appraisal on your house. For streamline refinance loans, the VA does not require any of that. However, especially in a real estate climate marked by short sales and foreclosures, your lender may require some of these measures to ensure that they are making a good loan. The VA covers up to 25% of your loan, but the lender does not want to feel the pain of default on the rest. As a result, the lender may wish to verify employment and pull a credit report. Their only concern should be that you can make the payment and that you have not missed a mortgage payment for the last 12 months. These measures, or “overlays,” are permitted by the VA.
The lender may also ask for an appraisal to make sure that homes in your area are worth the risk. If you suspect that neighborhood home values are low or you know that you are underwater, meaning that you owe more on your loan than the house is worth, you might try to find a lender who does not have any appraisal requirements.
What To Expect
Once you get past the overlay requirements, you can expect your streamline refinance to go very quickly. Your lender will provide you with a document to show you exactly how much you will be saving, but you can expect that with a lower interest rate, your mortgage payments will be lower. If this is not the case, you will not be able to get the loan. The VA wants to help you improve your financial outlook, not damage it with higher interest or higher payments. The only exception is if you want to take out your streamline refinance loan for a shorter term than your original loan. Also, if your original mortgage was an ARM in which the interest varied with current rates, your new rate and payment may be slightly higher due to the current market. In the long run, however, you will save money.
No Frills, Quick Processing
Because the process is quick, a streamline refinance loan does not offer the frills that a cash out refinance offers. You cannot take cash away from a streamline refinance loan to take care of other obligations, nor can you use it pay off a second mortgage. The only things that can be added to your loan is the cost of certain energy-efficiency improvements, the VA funding fee, and closing costs. The loan cannot be for more than your original loan, except in the case of these small add-ons.
This loan meets the needs of many Veterans and personnel who are currently serving. Unlike other types of VA loans, a streamline refinance does not require that you currently live in the home that you are financing. You may have lived there at the time you took out your original loan but if you have been transferred, moved, or bought another home that meets your current needs, you can still take advantage of the program. This even allows you to rent out a property where you previously lived to turn it into an investment.
Cut The Red Tape
Don’t be tied up by red tape or high interest rates! Apply for a streamline refinance loan with VALoansFinance.com today. If you need more information, just call our loan specialists at (855) 383-5002. They will answer your questions and get your application going so that in about 10 days, you will have more money in your pocket.