Top 3 Benefits of Refinancing with Your VA Loan
There are many reasons why people take advantage of the ability to refinance their home. When you refinance, you are essentially paying off your existing mortgage and replacing it with a new loan. Depending on many factors like how much you still owe on the property and what the current market is doing, refinancing can be an incredible benefit to you as a homeowner. As a military member or veteran, you have the right to take advantage of the unparalleled VA Home Loan. This extends to refinancing and can be a powerful tool even after you own your home.
Get a Lower Interest Rate with the VA IRRRL
The VA Interest Rate Reduction Refinance Loan (VA IRRRL), sometimes referred to as the VA streamline refinance loan, is a powerful tool that can help you get a lower interest rate. If you have an existing VA Loan and you notice that interest rates are lower today than they were when you first purchased your home, this could be a great time to take advantage of the IRRRL. With a VA Loan, the IRRRL allows you to quickly refinance your loan and get an interest rate that is below your initial one, giving you significant savings over time.
According to Forbes, when the rates in 2020 dipped from 3.5% to 3.13%, refinancing lending jumped more than 60% in just a few months. With the VA IRRRL you can take advantage of the powerful loans offered by the Department of Veterans Affairs and capitalize on interest rates available today that may not have been available at the time of purchasing your house. When interest rates drop, this provides an opportunity for you to save big over the life of your loan.
The VA IRRRL offers a streamlined process with less paperwork than typical refinancing options. In most cases, your overall monthly payment will go down and this loan has a much lower funding fee than traditional VA Home Loans. Unlike the standard fee, the funding fee for a VA IRRRL is only 0.5% and this can be bundled into your full loan amount. This loan is only available if your current loan is a VA Loan and helps you expedite the process and get a lower rate quick.
Get Cash Back with a VA Cash-Out Loan
There are times in life when having a little extra cash could be a huge benefit. From paying off debt and upgrading or renovating your home to needing cash for emergencies, life happens and being able to take out cash from the equity in your home can be a powerful tool. If you find yourself needing to tap into the equity of your home, the VA Cash-Out loan could be a great option.
This loan helps you get cash from the equity in your home while still taking advantage of the same great VA Loan benefits. With a VA Cash-Out refinance there is no private mortgage insurance (PMI). While you need to be eligible to receive a Certificate of Eligibility, you don’t need to be in a current VA Loan to take advantage of this refinance option.
In order to qualify to take advantage of a cash-out refinance, the equity in your home must be equal-to or greater-than the amount of money you wish to pull out or use, plus any closing costs. This new loan, like the VA IRRRL, will then replace your existing mortgage and can represent up to 100% of your property’s value. Similar to other VA Loans, this refinance is subject to a funding fee. These fees are the same as those you’d find in traditional VA Home Loans at 2.3% for first time users and 3.6% for each subsequent use.
Shorten the Life of your VA Loan
Another reason some homeowners decide to refinance is so they can shorten the lifespan of their loan and pay their home off quicker. If you are in a financial place where this is feasible, this can be a great benefit. By turning your existing loan into a shorter term, you typically expect a higher monthly payment. This approach can help you save some significant money that you would have paid in interest over time and help you finish paying your loan quicker. If this is your goal with refinancing, we recommend working directly with a loan officer who can help you determine your eligibility and options.
Call MHS Lending Today To Refinance Your VA Loan
At MHS Lending we are experts in helping military families and veterans navigate the home buyer journey. If you’re looking to refinance your VA Loan with one of these powerful loan options or want to learn more about the process, give us a call today. It is our mission to help those who have served (or are actively serving in the U.S. military) buy a home or refinance an existing mortgage. We look forward to serving you.