Are you a homebuyer with a VA loan, wondering about the options available for refinancing?
Refinancing your VA loan can be an excellent way to secure lower monthly payments or reduce interest rates, giving you more financial flexibility and peace of mind.
Read on for an overview of the different refinance scenarios that are possible when dealing with a VA loan!
Overview of VA loans and their advantages
VA loans are mortgages that are provided to military members, veterans, and sometimes spouses.
Along with a more advantageous interest rate, VA qualified borrowers can pay less out of pocket at closing as VA loans offer low or even no down payment options and capped lender fees.
In addition, VA loan borrowers don’t have to pay private mortgage insurance (PMI) on their loans and there is no loan limit or income restriction.
With these valuable loan advantages and more, it’s easy to see why so many military members and veterans turn to VA Loans as their preferred choice for a mortgage.
VA loan refinance options
Refinancing a VA loan can be a great way to save money and benefit from lower interest rates, but it’s important to make sure that you take the time to compare different options.
Start by understanding the terms of your original loan so that you have an informed baseline as you begin exploring other refinancing opportunities.
Consider using resources like consumer reporting agencies, consumer loan websites, and brokers or lenders for advice or for more detailed information about potential options.
Consider all your refinance options. Two popular options are a standard refinance and a cash-out refinance.
Standard refinance
A standard refinance follows the same process as a traditional mortgage. FHA, VA, and standard products all are options. Work with a lender and pick the product that works best for your needs.
Cash-out refinance
A cash-out refinance is when you obtain a new mortgage that has a greater value than your old one, allowing you to keep the difference in cash. This cash can be used for many things including home improvements or paying off other debts such as student loans.
Important considerations when refinancing your VA loan
Before you decide to refinance and replace your existing loan, there are important factors to consider such as the current interest rate, lender fees, closing costs, and any prepayment penalty on your existing loan.
In preparation for making a decision to refinance, divide your closing costs by how much you expect to save every month by refinancing.
Compare these numbers to determine if refinancing is right for you. A lender can help you break down the cost of closing, however, it’s important for you to understand what type of loan you’re getting into.
Understand the costs associated with a VA loan refinance
Refinancing a VA loan can be a great option for those looking to lower their interest rate and monthly payments or take advantage of their home’s increased value.
However, there are some potential costs you need to consider before making a decision.
Many lenders will charge an origination fee, usually 1% of the loan amount, as well as closing costs.
Closing costs are the biggest expense with refinancing and it’s important to determine if refinancing is a good deal even after paying all closing costs. Working with your lender will help determine what your total costs will be.
It’s also important to ensure you have enough equity in your home so that you don’t end up owing more than it is worth when all is said and done.
By doing your research and understanding all of your options, you’ll be able to confidently make the best decision for you.
Tips for getting the best deal on a VA loan refinance
To get the best deal possible, take time to compare rates and fees offered by different lenders. Look out for prepayment penalties, origination fees, and other costs that could add up over time.
Speak with your lender about restrictions that may apply to features like cash-out refinance or reducing the term of your loan.
Your credit history may impact your rate. Keep in mind that lender requirements may vary depending on the type of application you’re filing, so do your research ahead of time to know what to expect.
The Federal Savings Banks is here to serve those who have served
If you’re a veteran and looking to take advantage of the home loan perks associated with a VA loan refinance, it’s important to do your research.
Make sure you understand what kind of loan and rates are available, eligibility requirements, costs associated with the loan, and how to compare different refinancing options so you can get the best deal.
Don’t forget to factor in closing costs, origination fees, and even private mortgage insurance when doing your calculations.
By following these tips and doing your due diligence, you won’t just be saving money on your VA loan—you’ll also have peace of mind about making a sound financial decision for your family’s future.
Contact The Federal Savings Bank to inquire about your VA home loan refinance today. We’re here to offer unparalleled experience and insight, as well as exceptional customer service.
Subject to credit approval. Terms and conditions may apply. Subject to VA eligibility requirements. Property insurance is required on all loans secured by property.
This information is intended for educational purposes only. Products and interest rates subject to change without notice. Loan products are subject to credit approval and include terms and conditions, fees and other costs. Terms and conditions may apply. Property insurance is required on all loans secured by property. VA loan products are subject to VA eligibility requirements. Adjustable Rate Mortgage (ARM) interest rates and monthly payment are subject to adjustment. Upon submission of a full application, a mortgage banker will review and provide you with the terms, conditions, disclosures, and additional details on the interest rates that apply to you individual situation.
