When folks think of VA loans, home purchasing often comes to mind. Perhaps you’re a military veteran looking to buy your very first home. Or perhaps you’ve been around the home buying block once or twice now and this is your second or third home.
But VA loans aren’t just for home buying. In 2022, as “The Mortgage Reports” recently reported on, eligible homeowners can leverage VA loans to refinance their current mortgages into a new home loan with a historically low interest rate.
VA loans provide unique benefits to military vets and their families, including no private mortgage insurance (PMI), easy qualification standards, capped closing costs, and even a 100% cash-out option when refinancing.
VA Refinance Rates Are the Lowest of Any Program
This means reducing your monthly mortgage payment with a VA loan should be pretty much in the bag. When it comes to VA Refi options, it really comes down to your specific needs and financial goals.
The VA Streamline Refinance, also known as the IRRRL, is a quick and simple option that will help you slash your monthly mortgage bill due to the IRRRL’s incredibly low rates. Another great feature of the IRRRL is it allows you to shorten your current loan term or switch over from an adjustable-rate mortgage (ARM) to a fixed-rate.
The VA cash-out refinance will allow you to pull up to 100% of your home’s equity in cash so you can make home improvements or renovations, consolidate debt, invest in a new, income producing rental property, or really anything you can imagine.
The big difference here between a VA loan and a traditional refi is the VA option grants access to your home equity to get that big lump sum of cash at closing. Whereas traditional refinances only permit you to cash-out a proportion of the difference between your home loan and home value, the VA option allows you to cash-out on 100% of your home equity.
The VA Renovation Loan & the VA Mobile Home Loan
Sometimes, buying a fixer-upper makes a whole lot of sense from a value perspective. Renovating the property using the same mortgage? That can be done through the VA as well. You’ll also have the option of utilizing a VA refinance to cover any necessary repairs and home improvements.
A VA Mobile Home Loan, also known as a VA Manufactured Home Loan, allows you to purchase a manufactured home and refinance in a variety of ways. At the end of the day, it comes down to your unique, specific goals when you’re considering refinancing through the VA.
Locking in a lower interest rate and monthly payment is more than feasible through the VA. The Streamline (IRRRL) VA loan will get you there, no problem. If you’re looking for a lump sum of cash at closing, the VA cash-out options are where you’ll want to turn, as the VA’s IRRRL loans don’t provide cash-out at closing.
Taking a Deep Dive Into the VA’s Streamline Refinance
The VA’s Streamline Refi is also known as the IRRRL, which stands for Interest Rate Reduction Refinance Loan. The primary advantage of the IRRRL is the interest rates, which are the lowest available by a mile.
Lower rates equal lower monthly mortgage payments, providing military veteran homeowners substantial savings for years and even decades to come. If you’re looking to switch from an adjustable rate mortgage (ARM) to a fixed-rate, the VA Streamline option could be the perfect fit for you.
Fixed-rate mortgages offer stability in that the monthly payments remain the same, making the loans less risky for both banks and homeowners alike. When mortgage rates are on the rise, refinancing into a fixed-rate loan is an extremely savvy move, as you can dodge the bullet of skyrocketing interest rates and payments.
Pro tip: mortgage rates are experiencing a major uptick as we speak. So if you’re a military vet looking to lock in a historically low interest rate before they shoot to the moon, now might just be the right time to pull the trigger on a VA refinance.