Direct VA Loans

VA Refinance Program and Veterans Options

Qualified active duty, former military and Reserves/Natonal Guard personnel have a great advantage when it comes to refinancing their mortgages. VA home loan refinance programs offer veterans options that may not be available to other borrowers.  A homeowner who qualifies for a VA home loan refinance can take a look at the options and assess, based on individual or family needs, how a VA home loan refinance can help household finances.  

A VA home loan refinance allows qualified homeowners to pull equity out of their home in the form of cash, to consolidate debts into a low-interest mortgage, to switch to a lower interest rate mortgage, or to take money out for home improvements.

VA Streamline Refinance

If the goal is simply to reduce monthly overhead, an easy way for an active duty or former military serviceperson to refinance is through the VA Streamline Refinance option, also known as a rate-reduction mortgage. This type of refinance is available only for an already existing VA home loan – conventional mortgages are not eligible for this program.  A VA streamline refinance is a simple refinance of a current mortgage into a new VA home loan with a lower interest rate, or a lower term or both.  The income, employment, and credit documentation requirements are often waived for a VA streamline refinance, making the process quicker and easier.  Some lenders offer this program with no out of pocket expenses for the borrower at closing. Little or no cash back is allowed with this type of VA home loan refinance.

VA Cash Out Refinance

The VA cash out refinance option allows a homeowner to use the equity built in a home for any purpose, such as purchasing a new automobile, paying for college, or just taking a nice vacation.

VA borrowers may finance up to 100% of a home’s value. It’s important for a homeowner to consider the value of their home, and whether there is enough equity built up to receive cash out from this program. The documentation requirements for this full VA refinance program are similar to those of a new purchase. VA-approved lender requirements for VA refinancing can vary so veterans should find out what options are available.

VA Debt Consolidation

Similar to the cash out option, a homeowner who has enough equity in his or her home can refinance into a larger VA home loan in order to “consolidate,” or pay off other high-interest debts like auto loans and credit cards. Borrowers often do this to reduce their overall rate of interest, and to lower their monthly overhead. Often times a borrower may even be able to secure a mortgage refinance interest rate that is lower than their prior rate. The VA debt consolidation refinance option gives the borrower a way to lower the household’s monthly payments on multiple debts.

VA Loans for Home Improvement

Veterans who qualify for VA cash out refinance often choose to use funds received at closing to make home improvements.  VA Loans for home improvement can be used for building an addition or simply making needed repairs.

Energy Efficient VA Mortgage

The VA home loan refinance program also offers an Energy Efficient Mortgage (EEM) option that provides additional funds for any improvement that helps make the home more energy efficient. The improvements must result in cost savings over time, and must be documented by a Home Energy Rating System report.  Funds up to $3,000, and in certain cases even up to $6,000 or more, can be used to improve heating and cooling systems, or replace appliances like refrigerators, washers and dryers with Energy Star efficient appliances.

Other Government-Backed Programs

While the VA home loan programs provide options to veterans and active-duty personnel that may not be available to other borrowers, it can be advantageous to also take a look at other government-backed mortgage programs such as those offered through the Federal Housing Administration (FHA). In some situations, the FHA programs can offer advantages. For example, the FHA refinancing options include cash-out, Streamlines and EEMs similar to VA refinancing.

The VA home loan refinance options are a great way for qualified individuals and families to ease their debt burden, make improvements on their home, or take out cash. When investigating these programs, a borrower should be certain to speak with a lender that has government approval and sufficient experience with the VA and FHA programs.


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