The US Veterans Affairs Administration has helped provide mortgage loans for veterans since 1944. The program allows both veterans and active duty service members to obtain affordable mortgages that the VA guarantees lenders will be repaid. The program has been expanded to include refinancing of these loans and certain requirements apply.
Using VA Loan Eligibility
To qualify for a refinance loan through the VA, you must have used your initial home eligibility. In other words, it must be a VA loan to refinance VA. A new Certificate of Eligibility is not required. Your previous Certificate of Eligibility serves as proof of the use of your right.
loan limits
VA refinance loans are subject to certain loan limits as defined by the program. These limits limit the amount of the reimbursement obligation required by the program. Each county determines the amount of the loan limit. Typically, lenders will approve up to four times the basic right amount of $36,000 for a home loan, with no down payment.
Financing rate
A financing fee is required for all those applying for loans through the VA Guaranteed Loan Program. Fee payment is required at loan closing. You can pay the financing fee in cash or transfer it to property financing. Financing fees can range from 0.5% to 3.3%. Financing fees for the second use of your eligibility are generally higher than the first use. Certain disabled veterans and surviving spouses are not required to pay a funding fee.
Refinance loan with interest rate reduction
The program allows you to refinance up to 100 percent of the home’s value. Although the program does not require credit checks or reappraisals, lenders may impose these requirements according to their own rules. Unlike a VA purchase loan, you do not have to certify that you will occupy the home. You just have to prove that you have previously occupied it. The IRRRL program cannot be used to pay a second mortgage. Generally, the second mortgage must be approved. Your current mortgage payments must be current, with no more than one 30-day late payment in the past year.
Cash Refinance Loan
If you want to withdraw cash from your home to cover medical costs, children’s college or home improvement costs, the VA offers a cash-out refinance program that allows you to use your equity to finance these expenses important. The qualifications above apply similarly for these loans. You can also refinance up to 100 percent of the property’s value. Unlike the IRRL loan, a credit report, income verification, and property appraisal are required. You must also certify that you will occupy the home being refinanced.
Certain costs associated with refinancing can increase the cost of the loan to an amount greater than the fair market value of the property. These costs may include state and local taxes, discount points, and other closing costs. Refinancing applicants should always take these additional costs into account when determining if refinancing their VA loan is a good idea.
