VA Loan Refinancing
Claim A Lower Interest Rate With VA Loan Refinancing
Capital Bank is a national lender with expertise in veteran mortgage – so you feel like you are speaking to your local expert.
Think back to how happy you were when you got the loan to buy your current house. Now that time has passed, are you still happy with the interest rate? Whether you obtained your home with a VA mortgage or a conventional one, you may be paying interest rates that are much higher than what the market currently requires. Every time you write your mortgage payment check, you may find yourself annoyed that you are paying a higher interest rate than necessary. If the most affordable option at the time was an adjustable-rate mortgage (ARM), you may prefer the security of a fixed-rate loan.
If you are a Veteran, you have the opportunity to do something about your higher rate or ARM mortgage. By obtaining a VA loan refinance from our network of VA Loan Specialists such as Capital Bank, N.A., you can shave points off your interest rate, lower your monthly payments, and stretch your monthly budget further. The VA offers both a cash out refinance loan and an interest rate reduction refinance loan that can help you.
Cash Out VA Refinance Loan
The cash out refinance loan is very similar to obtaining the initial loan on your property. Though it is good for refinancing loans from any source, you must meet the eligibility for VA home loans and the qualifications from a local VA-approved lender. The advantage is that you can obtain either a lower interest rate on your mortgage, cash back for any good cause, or both. Since you can get cash in hand for the same low interest rate, you can remodel your home, handle tuition bills, or consolidate high-interest credit cards for less than the rate on a home equity loan.
Though the credit requirements are less stringent than for the original loan, you must still meet creditor requirements to obtain a loan. Some lenders will work with a credit score in the 500s, while others require 1000 points more. Some will overlook a late mortgage payment, while others will not. You need to work with the lender to determine whether you qualify. The lender needs to know that you will be able to repay the loan, so many banks require that you have made your mortgage payments on time over the last 12 months.
Regardless of who your lender was for your original loan, any VA-approved lender can help you when it is time for a VA home loan refinance. Capital Bank, N.A. is able to work with you whether you want a cash out loan or an interest rate reduction refinance loan (IRRRL).
With a low interest rate, a cash out VA loan refinance has several advantages:
- The program is good for homeowners with either a standing VA loan or with a non-VA loan.
- Your interest rate will be lower than your current rate, which will make your payments lower.
- You can refinance for up to 100% of the home’s value.
- If you have equity in the home, you can take cash out at a cheaper rate than getting a home equity loan.
- You can use the program to refinance a first and second mortgage.
- You can use it for any principal residence, regardless of how long you have owned it.
- The limit of the loan is $424,100.
- You may have to pay closing costs and a VA funding fee, but both of these can be added to the balance of your loan.
Not all lenders allow you to take cash out. You may have to shop around with different lenders to find the one that will give you the best deal for your circumstances. Additionally, this type of loan requires an appraisal as well as a new Certificate of Eligibility.
Want Lower Interest? Consider An IRRRL (Streamline Refinance Loan)
Even if you do not need cash with your VA home loan refinance, you may want just the lower interest rate to lower your payments. The IRRRL, also known as the VA streamline, works for refinancing loans that were originally written through the VA. Many banks will process loans without a new appraisal. Credit requirements vary, although the VA does not require you to be prequalified.
Although the VA streamline is not for you if you need money for home renovation, the one exception is for improvements to make your home more energy efficient. You may include up to $6,000 for this purpose in your IRRRL.
Aside from energy efficiency improvements, the only other things that can be added to your mortgage in a streamline loan are the VA finance fees and closing costs, if your lender requires these. In any case, your loan cannot be any more than 100% of what you owe, plus these fees.
With either of these loans, the goal is to get your mortgage down to a lower rate than what you originally had. The only exception is if you have an ARM loan, where the interest was temporarily lower than a fixed-rate mortgage would require. With a fixed rate, you will normally save money over the course of your loan. The VA will be glad to help you do this.
This loan has several provisions:
- This program is only good for current VA loan holders.
- You cannot use it to pay off second mortgages.
- The loan value is up to $424,100.
- The VA funding fee is only .5% unless you are exempt.
- Credit requirements are not as strict and will permit one late mortgage payment over the last 12 months.
- You do not have to currently occupy the property.
- There is no maximum loan-to-value (LTV), but you may be able to refinance up to 100% of the home’s current market value.
- No appraisal is required.
Many lenders do not even require a credit check, but this as well as the appraisal requirements may vary by lender.
How Can You Qualify For A VA Loan Refinance?
Applying for a VA loan refinance with cash back is virtually the same as applying for a new home loan. You must provide a Certificate of Eligibility and meet the service requirements. In other words, you must:
- Be a current service member with at least 90 days of service
- Have served as a minimum of 90 days in wartime or 181 days in peacetime
- Be a current member of the reserves or National Guard with six years of service
- Be a commissioned officer of the Public Health and National Oceanic and Atmospheric Administration
- Be a surviving spouse of deceased combat Veteran who has not remarried
- Been discharged for hardship, at the government’s request, or due to reduction in force, certain medical conditions, or handicap.
Applying for a Certificate of Eligibility is easier than ever. As long as you have your DD-214 proof of service, you can apply online. If you don’t want to take the six weeks or so that it takes to get this certificate by mail, you can work with Capital Bank, N.A. to obtain your COE in minutes. As long as your records are current and complete in the VA database, your lender can expedite receipt of the form.
If you are applying for an IRRRL, you do not have to produce a new certificate. Only individuals with existing VA loans are able to apply for the streamlined process, so your COE is already on file.
Even if you have a home already, you can still take advantage of VA loan refinance programs. For the cash out options, just contact our loan professionals at (866) 216-3577 or fill out our online application for pre-qualification. For an IRRRL, call us today to see how quickly we can get this loan process started for you.