Refinancing a VA mortgage loan is relatively simple through two of the top refinancing options that are available to homeowners. Through the government administration of Veteran Affairs, military affiliated homeowners are provided with the opportunity to receive lowered interest rates for mortgage payments, a budget for decreased monthly expenses and even receive cash for monetary amounts of the loan that may have already been paid. This can result in very successful mortgage refinancing, which is why the two VA refinance loan types that offer these benefits, are the most popular choice for home owning veterans.
Cash-Out Refinance
One of these top refinancing options is the Cash-Out Refinance. Set apart by its unconventional nature, this refinancing option literally provides homeowners with cash in hand. Most homeowners choose to refinance through the VA with this type of loan because it can give them the most bang for their buck. Unlike traditional refinancing, a Cash-Out loan allows homeowners to receive cash for what they’ve already paid towards the loan. This helps mitigate high interest rates, unnecessary credit checks and can prevent the need for additional loans being taken out.
For example, should a veteran wish to attend college or purchase a new car, they may be thinking of taking out a loan, this would of course pay for the vehicle or the tuition. But if our veteran already is making a house payment to a VA mortgage, they could refinance with the cash-out option to receive money to pay for schooling or transportation and still have the same monthly payment towards their home. If the original VA home loan amount was for $275,500 and the homeowner had paid off $10,000 of that amount, our veteran could implement a refinance through cash-out and receive up to $10,000 in cash. This of course could pay for some tuition or serve as cash down on purchasing a car. The loan amount would simply jump back to its original price.
This can be very beneficial because this option doesn’t hurt credit scores through various checks for loan approval and it actually can save money because lenders can use this refinance to lock in a lower interest rate than was granted before. It is obvious to see why it is one of the top refinancing options in the agency of Veteran Affairs.
An IRRRL Loan Refinance
The second of our top two refinancing options is the VA’s IRRRL. Traditionally titled an Interest Rate Reduction Refinancing Loan, this loan has the two nick names of an IRRRL or a VA Streamline Refinance. Unlike the Cash-Out refinancing option, this style of loan does not provide homeowners with cash, but instead quickens the refinance procedure whilst securing better interest rates and low monthly payments.
Because homeowners have already undergone the rigorous paperwork, appraisals and inspections during the initial home buying process, there is no need to go through it again with a streamlined loan. With minimal paperwork, this option shortens the refinancing process to as little as four weeks, whereas a conventional refinance loans can take three months or more. This allows veterans to secure the lowest interest rate in a quick manner and negotiate for lowered monthly mortgage payments.
The tight timeline, limited paperwork and no closing costs to refinance with the streamlined loan are only a few of the reasons why this refinancing option is one of the most popular.
Refinance Your Home with a VA Loan
Through the government administration of Veteran Affairs, military affiliated homeowners are provided with the opportunity to receive lower interest rates for mortgage payments, a budget for decreased monthly expenses and even receive cash for monetary amounts of the loan that may have already been paid. These can all be accomplished through the top two loan options of a Cash-Out Refinance or an IRRRL.