If you're a veteran and you funded your home purchase with a VA home loan, you don't have to stick with traditional methods of refinancing if you want to take out a new loan. The VA offers two unique programs designed specifically to help veterans refinance their homes.
1. A home equity refinance with a new VA home loan. This process involves simply taking out a new VA home loan to replace your previous one. You are allowed to take out a new loan equivalent to 90% of the value of the home after an appraisal. This type of mortgage refinance is simple, but it can be a difficult process to establish eligibility for the second VA loan while still holding the previous one. Nevertheless, if you're willing to deal with some paperwork, a standard home equity refinance through the VA is beneficial.
2. A VA Streamline Refinance. The purpose of a refinance is to save money by taking advantage of one of the lowest mortgage rates available, presumably one that is lower than the mortgage rate in place on your current loan. The VA Streamline Refinance accomplishes this task in a swift, simple manner. Essentially, the interest rate on the loan is simply reduced and the borrower is charged minimal closing costs.
Technically, a new loan has been issued, but as far as the borrower is concerned, nothing has changed. A VA Streamline Refinance comes with no interruptions, little paperwork, and minimal closing costs. No income verification is required. Appraisal, credit checks, and inspections are also unnecessary.
This refinance option does have some limitations, however. Borrowers can't take cash out to put toward other expenses. If you're looking for a way to access home equity through a refinance, this is not the option you want to pursue.
If you're a veteran, you can save a significant money with little hassle by pursuing one of these VA refinance options.
