The best refinancing options on the market
Military borrowers have access to the most powerful home purchasing program on the market. So it stands to reason that the same would hold true when it comes to a refinance loan. A mortgage refinance allows borrowers to capitalize on historically low interest rates and carve out some financial breathing room, on top of potentially deferring up to two months of mortgage payments. There are two major VA refinance options, an Interest Rate Reduction Refinance Loan, also known as an IRRRL or a VA Streamline, and a VA Cash-Out Refinance. Each has a different purpose and varying requirements. A VA Streamline helps borrowers shrink their monthly mortgage payment by refinancing into a new, lower interest rate. Homeowners can use a Cash-out Refinance to lower their rate, take out needed capital from equity, or both. But these refinance options are alike in only one way – they provide military homeowners with unmatched flexibility and a clear path to a brighter financial future. Here’s a brief rundown on the VA’s two main refinance programs.
VA IRRRL Streamline: The VA Streamline is a no-frills refinance loan that features almost none of the hassle and paperwork that accompanies a conventional refinance. The VA Streamline can get veterans into a lower-rate mortgage with lower monthly costs. In fact, that’s one of the loan’s primary requirements. Unless the borrower is refinancing an adjustable-rate mortgage (ARM), the Streamline has to lower the interest rate. Even if ARM, the rate has to lower by at least .5%. The VA does not require appraisals or credit checks on Streamlines, but some lenders have made them mandatory. We are still able to process some Streamlines without an appraisal, which is a significant benefit for homeowners. Homeowners may have to pay closing costs on a VA Streamline, but these can be rolled into the overall loan amount.
VA Cash-Out Refinance: On a VA Cash-Out, the bonus is that qualified veterans can refinance up to 100 percent of their home’s appraised value at Aligned Mortgage. We are among the relatively few who can refinance up to 100 percent of the home’s value. There are some restrictions and limitations, so it’s best to talk with one of our refinance specialists or Loan officers. Borrowers don’t have to take out any cash. It’s just that this is the only option to jump into the VA loan program from a conventional or FHA loan. The VA’s Cash-Out Refinance loan allows qualified veterans with conventional or VA loans to refinance to a lower rate while extracting cash from their home’s equity. Borrowers have traditionally used Cash-Out Refinance loans to pay off high-interest debts or make home improvements. But there aren’t any concrete constraints on how you spend the money. Unlike a Streamline, the VA mandates that cash-out borrowers submit to the standard credit and underwriting process. The loan processing for a Cash-Out Refinance is basically identical to the original VA purchase loan, from the income verification and debt-to-income ratio to a home appraisal. A refinance loan replaces that existing mortgage instead of complementing it.
For more information about refinancing into a VA Home Loan, please call (808) 436-5791.
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A division of American Pacific Mortgage Corporation NMLS #1850. *#1 VA purchase lender as of January 1, 2019 – December 31, 2019. Results provided by CoreLogic. Licensed by the Department of Business Oversight under the California Resideential Mortgage Lender Act.