Refinancing a conventional mortgage into a VA loan gives borrowers an opportunity to get a low-interest rate. Qualified borrowers can easily refinance their existing loans into a new VA mortgages, by submitting new applications, title reports, and fulfilling other required paperwork. Borrowers defaulting on refinancing options with other conventional loans can refinance with VA loans, irrespective of the market value of their property or their credit score. This post discusses three ways in which a borrower can refinance into a VA loan through a VA approved lender. 1. Cash-out Refinance Qualified veterans who don’t have enough equity to refinance with FHA or conventional loans can refinance with a VA cash-out loan at lower interest rates. The proceeds from the loan are received in form of cash, which allows borrowers to take care of other expenses, such as credit card payments and home upgrades. The maximum amount of cash available to the borrower during refinancing is determined by calculating the current appraisal value of the subjected property. Most VA approved lenders in Texas allow a cash-out amount of up to 80 percent. Unlike the IRRRL, a cash-out VA loan is thoroughly documented, and the borrower is required to submit their most recent paycheck stubs, W2 forms, and their federal tax returns for the last two years. 2. IRRRL or Streamline Refinance IRRRL (Interest Rate Reduction Refinance Loan) - often regarded as a VA streamline loan - is a refinance option that requires minimal paperwork compared to other available VA loans. It doesn’t require old W2 forms, copies of paycheck stubs or any minimum credit score. Though some lenders may require a minimum credit score, VA guidelines only mention examining the previous year’s mortgage history. The VA doesn’t have any specified maximum loan amount but has a specified maximum amount that it guarantees to the lender, which is 25 percent of the loan amount. 3. Standard VA Loan Unlike VA streamline, which only allows VA to VA loan transactions, the standard VA refinancing option also allows refinancing of other loans, such as FHA loan and conventional loans. Refinancing a conventional loan with a VA loan is a viable option when property value is a concern, as refinancing with a conventional loan goes up to 90 percent of the property’s current value. If, for example, the home mortgage balance is $200,000, refinancing with a conventional loan requires an appraisal value of at least $222,222. If the appraised value is less than $222,222, the borrower cannot refinance their loan with another conventional loan. This is where refinancing with a VA loan is a possible way out. The Bottom Line If the interest rate is low enough for VA loans as opposed to conventional or FHA loan programs, it makes sense to refinance an existing mortgage. The amount of money you receive as refinance, however, depends on the current home value and the policies of the lender. It is therefore important to choose a qualified lender that can not only help you decide whether refinancing will be a wise decision, but is also able to answer all your questions related to eligibility and application procedure.
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2/8/2021 03:42:34 pm
Good day,
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November 2017
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