Types Of VA Mortgage Refinancing
Which VA Mortgage Refinancing Option Will You Choose?
Capital Bank is a national lender with expertise in veteran mortgage – so you feel like you are speaking to your local expert.
As a Veteran, you may know about VA benefits to buy a home, but do you know how helpful VA mortgage refinancing can be if you bought your home several years ago with a high interest rate? In addition to acquiring a home with no money down, no private mortgage insurance, low interest rates, low closing costs, and many other advantages, Capital Bank, N.A. can also help you use your VA benefits to lower your interest rate and therefore the amount of your monthly payments. With some loans, you can even get cash back for any good purpose.
Take Advantage Of Two VA Mortgage Refinancing Options
Over the past few years, interest rates have been historically low. Now averaging 3.5 to 4.5% depending on your geographic location, the rates are two or more points lower than they were in 2008 and half of what they were in 2000, when 8% or more was common. If you refinance now with a VA loan, you will lock in a lower interest rate, reduce your payments, and decrease the lifetime amount of interest you will pay on your loan. Given a choice between feeding the bank’s bottom line or your own, why wouldn’t you choose to benefit yourself and your family and refinance with the VA?
Do You Need Cash Back?
The department offers two types of VA mortgage refinancing packages: the cash out refinance and the interest rate reduction refinance loan (IRRRL). Both of them will serve the purpose of lowering your interest rate, but each VA mortgage refinancing program has specific advantages that may work particularly well for your situation.
The cash out refinance loan can be used to refinance mortgages originally written through the VA or from another source. To apply, you have to undergo an appraisal on your house and evaluation of your personal credit. Handled by a VA-approved lender, this type of loan has the backing of the VA, but represents more risk for your lender. By ordering an appraisal, the lender verifies the worth of your house, which governs the amount of the loan you are eligible for. By reviewing your credit, the banking institution verifies that you are able to make the payment. Though credit requirements are a bit more lenient on VA mortgage refinancing loans, you still must show a good record of on-time mortgage payments in order to qualify. The home you refinance must be your primary residence.
This type of loan could be perfect for you if you live in an area where homes have appreciated over the last few years. This will entitle you to obtain cash you need to reduce personal debt, make improvements to your home, or take care of educational expenses. You can also pay off second mortgages on your property and refinance from an adjustable-rate mortgage (ARM) to a fixed interest rate.
Do You Need A Lower Interest Rate And Lower Payments?
The VA also offers the interest rate reduction refinance loan, also known as the IRRRL or the streamline refinance, a program specifically for refinancing VA loans. This type of loan requires less documentation and can often be completed in as little as 21 days when you work through an approved lender. You will get no cash back for any purposes besides the VA loan fee, closing costs, and improvements in energy efficiency that you might make on your home, but the loan can reduce interest rates and therefore monthly payments. You can use this VA mortgage refinancing loan even on property you no longer occupy, which makes it ideal for service personnel who were transferred or for Veterans who might wish to move to a different area when they retire. You can rent out the home and buy another one if you wish.
When using IRRRL VA mortgage refinancing, your lender may have requirements beyond what the VA requests. The VA, for example, does not require an appraisal or credit reports, but many lenders ask for both to protect themselves in turbulent economic times. The overlay policies are internal, so you may wish to find a lender that is more lenient if you have a home that is underwater or that you know will be valued low. Though some lenders are also more lenient on credit requirements, they will check income and verify that you have made mortgage payments on time for the last 12 months. With either type of loan, Capital Bank, N.A. wants to help you qualify and will work with you if you anticipate problems.
You Must Be Eligible
For either loan, you will need to be eligible according to VA requirements. If you already have a VA loan, you will have already met the requirements and supplied your lender with a COE. If you have a conventional or FHA loan and are interested in VA mortgage refinancing, you will need to prove your eligibility by meeting one of the following requirements:
- You are a current service member who has served at least 90 days or you are a Veteran with either 90 days of wartime service or 181 days of peace time service.
- You are a current member or Veteran of the National Guard or reserves.
- You are the surviving un-remarried spouse of a service member killed in action, disabled in service, missing in action, or a prisoner of war.
- You were discharged due to hardship, the request of the government, or because of reduction in force, certain medical issues, or disability.
What Are You Waiting For?
Capital Bank, N.A. can help you obtain your Certificate of Eligibility if you need it by using the VA online database. With two great loan programs available for eligible Veterans, what are you waiting for? Loan specialists are waiting for your call at (866) 216-3577 to answer any questions you have or help you through our fast online prequalification process.