Va Loan Refinance

The government backed VA loan refinance program offers special protections for veterans and their surviving spouses. It is an act of gratitude for the loyal and honorable service that veterans have given to their country. Being thoughtful of the veterans, the government added some protections and restrictions to VA loan refinancing. The loans are available to veterans and to certain qualifying spouses who survive veterans.

Positives about VA loan refinance:
• Refinance VA loans are “streamlined” to move faster for veterans than other refinance loans.
• No closing costs on VA loans; a small fee of less than .03% of the loan is rolled back into the loan.
• Government will back VA loans, guaranteed.
• Up to 90% of home value can be borrowed with home equity loan; includes cash out options.
• Available at many local lenders or banks and credit unions.
• Unmarried surviving spouses may also qualify for VA loan refinancing.
• Lower than conventional interest fixed rates only; today they are at 4.25% plus low points to equal 4.54% APR.
• New appraisals are not required, nor is income documentation.
• PMI insurance not required.
• Credit checks only go back 12 months, except for long term adverse items like bankruptcy.

Negatives about VA loan refinance:
• Can take time to get approval and certificate of eligibility.
• Line of credit home equity loans (HELOC) and interest-only loans are not allowed.

Streamlining the VA loan refinance program for veterans gives the veterans a chance to get their loans quickly and without a lot of unnecessary hassle along the way. It is like giving them a front seat at the theater, or allowing them to go to the head of a line. With no closing cost requirements, VA loan refinancing is affordable to all veterans or surviving spouses at times when they may not have a big down payment handy.

Certain restrictions against some home equity loans, such as line-of-credit or interest-only loans, protect the veterans against predatory lending practices. Not every lender is as respectful of veterans as the government is towards them.

Lenders welcome VA loan refinances because they have full backing against default by the government. This means a lower risk, which is reflected in the VA loan advantages of lower interest rates. Rates are below those offered for conventional mortgages.

There are tangible savings with VA loan refinance products. Veterans do not need to come up with a typical 3% closing cost payment, they get the lowest interest rates, there is no expense for new appraisals and there is less paperwork than for first mortgages or conventional home equity loans.

Veterans may have some credit record problems related to their military service and being away from home. This is partly overcome by not allowing lenders to use information on credit records that is older than one year, aside from major negatives like bankruptcy, tax lien information or legal judgments. For many veterans, the VA loan refinance is their best loan of choice.