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Refinancing your VA loan can help you take advantage of lower interest rates, reduce the length of your term or provide access to cash. Learn about the two main ways to refinance your VA loan and what else you should consider.
In most cases, yes. VA loans tend to offer flexibility and attractive rates and terms, making them a popular choice. There are two primary ways to refinance a VA loan:
Rate Reduction Refinance Loan (IRRRL) is often called a streamline refinance because it requires less paperwork than any other VA loan. In fact, it doesn’t require any income documentation, tax returns or employment verification.
This option allows a qualified borrower to refinance their current mortgage to a lower interest rate, saving money on administration fees and interest payments.
If you’re looking for extra cash to pay down debts, cover the cost of home repairs or anything else, consider a cash-out refinance. This new loan replaces an existing loan and taps into your home’s equity for a cash payout.
A cash-out refinance is a bit more complicated than an IRRRL. The application requires documentation like pay stubs and tax returns.
VA refinances generally require:
Refinancing a VA loan is similar to applying for a first mortgage:
It depends on your reasons for refinancing. If you’re looking for a lower interest rate or lower mortgage payments, look into an IRRRL as soon as interest rates drop below your current rate. And since private mortgage insurance isn’t required for VA mortgages, you don’t need to have a lot of equity before refinancing.
Make sure refinancing makes financial sense by weighing the costs against your potential savings.
Refinancing a VA loan can mean potential savings, but there are also a few potential drawbacks.
What are my other refinancing options with a VA loan?
If a VA loan isn’t the right fit for your situation, you could consider refinancing your existing VA loan into another type of mortgage:
You have two ways to refinance your VA loan to take advantage of lower interest rates, reduce your monthly payment or tap into your home’s equity. Compare refinancing options to find the right one for you.
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