How to Refinance a VA Home Loan

You probably already know it’s a fantastic home-financing tool if you have a VA loan. But the benefits of VA loans don’t end once you’ve bought your new home. It’s possible to refinance your existing loan with another one using the VA program. 

You can effectively lower your interest rate, reduce your monthly payments, or eliminate mortgage insurance with a refinance. Read on for helpful advice on the primary options for refinancing a VA loan and how to determine the best option for you.

Primary Options for VA Loan Refinancing

You typically have two options to consider for VA loan refinancing. These are:

Interest Rate Reduction Refinance Loan (IRRRL)

The IRRRL is also commonly called a “VA streamline refinance.” It is a simplified, fast way to get a better mortgage deal for service members, veterans, or surviving spouses. You can use the loan to refinance your old mortgage with a new one. 

How Does a VA Streamline Loan Refinance Work?

The lending approval process for the IRRRL is greatly simplified. You do not require a VA appraisal, and most lenders waive the typical underwriting processes of a VA purchase loan. The net effect is lower fees, less paperwork, and a shorter turnaround.

You can use the loan to:

• Lower your interest rate or monthly payment amount
• Switch from a variable interest loan to a fixed-rate VA loan
• Refinance a rental home that is not your primary residence

You cannot take out your home equity with VA loan refinancing. However, you may need to meet the Department of Veterans Affairs eligibility requirements and deal with an approved lender. 

Cash-Out VA Loan Refinancing 

Cash-out refinancing is a mortgage option that allows current or veteran military service members to convert their home equity to cash. This loan replaces the older loan backed by the Department of Veterans Affairs. 

How Does Cash-Out Refinancing Work?

The processing for this type of VA loan refinancing is similar to the purchase loan. In addition, you need to present a Certificate of Eligibility to meet service or surviving spouse requirements. 

The lender conducts a VA appraisal through approved appraisers. You can only use your primary residence to access the loan. The requirements from lenders vary greatly but may include the following:

• VA appraisal
• Minimum credit score set by the approved lender
• Debt-to-income ratio 

Your lender will consider your overall ability to repay the loan. With VA loan refinancing, you may be able to access up to 100% of your home’s appraised value. However, you need to be careful when taking out the loan; only sign a refinance when potential savings outweigh the costs. 

VA Home Loan Refinancing 

Refinancing your VA loan can help you access lower interest rates, switch to a fixed-interest loan, or tap into your home equity. 

The VA streamline loan refinance has fewer bureaucratic processes and lower eligibility requirements. In addition, cash-out refinancing allows you to take out your home equity to fund high-return projects like home improvement.

Work with Hero Home Loans to Refinance Your VA Loan 

Before refinancing your VA loan, compare different lenders to get the best deal and ensure that the potential savings outweigh the costs. Contact us to request rates today.