VA Refinance

VA Refinance

Save Money With A VA Refinance Loan

Over time, a veteran may realize that he can save even more money on his mortgage by refinancing. If he took advantage of the VA Home Loan program to get his original mortgage, then he can use the VA IRRRL program to refinance. There are several benefits to using this VA mortgage refinance program and it is only available to veterans, active members and their spouses.

The VA Interest Rate Reduction Refinance Loan program, also known as VA IRRRL, has been around for a while and it is specifically designed for veterans who purchased their home using a VA Home Loan. When you get your original VA Home Loan, you should always keep your Certificate of Eligibility. You will need that certificate to refinance, but the process is so streamlined that your Certificate of Eligibility may be all you need to get the job done.

Why do veterans and active service members refinance their mortgages? The biggest reason is to save money. Since a VA Home Loan does not charge mortgage insurance and offers competitive rates, a military member is already getting a great deal when they utilize the program. But after paying on a mortgage for a few years, things can start to change in the military member’s life and in the financial world.

As you pay on a mortgage, the principle that you owe on the home drops. With a VA Home Loan, more of each payment tends to go towards principle since there is not extra mortgage insurance to worry about. Over time, that balance can get low enough where refinancing it with another 30-year loan will significantly lower the monthly payments. This is one way that military families address the financial challenges that come with having the financial obligations of a growing family.

Another reason that people decide to refinance their VA Home Loan is that interest rates have dropped and that will also allow the lender to lower his monthly mortgage payments. Something as simple as a drop of one percent in an interest rate can save a homeowner thousands of dollars on his mortgage. When the savvy VA Home Loan customers see these interest rates change, they will consider taking advantage of a low market and refinancing their homes.

The first thing to understand about a VA IRRRL refinance is that you can only refinance a VA Home Loan. Veterans who utilized a standard mortgage to purchase their homes cannot use the VA IRRRL program to take advantage of lower interest rates or lower principle balances. They will have to get their refinance through a standard lender.

The VA IRRRL program only pays for the remaining balance on your loan. Some people use a refinance to try and get extra money to go on vacation or remodel their homes, but that approach will not work here. If you owe $50,000 on your home, then you will only qualify to refinance $50,000, even if your original mortgage was for $100,000.

One very helpful feature about the VA IRRRL program is that you do not have to use the same lender you used to get your original mortgage. You can choose any lender you like, as long as that lender is part of the VA Home Loan and IRRRL program. However, it may be very helpful to go back to your original lender as they already have the eligibility paperwork from your original loan on file.

Some of the immediate benefits of a VA IRRRL is that there are no closing costs and there may not even be a credit check. As long as your original mortgage is current with its payments, then many lenders consider that to be all they need when it comes to a credit check for the VA IRRRL.

Another extremely helpful feature of the VA IRRRL is that veterans can turn their adjustable rate mortgages into fixed rate loans and save a lot of money. The new mortgage landscape in the United States has emphasized the stability of the fixed rate mortgage and the VA IRRRL program allows veterans and active service members to take advantage of the low interest rates by locking them in for a very long time.

While there are monetary limits to these VA IRRRL loans, they are probably well within most people’s means. Depending on where you live, you could get a VA refinance for as much as $1 million. It is just one more way that the VA helps veterans and their families to deal with the changes in the world’s financial climate.