Refinancing a home loan involves replacing an existing mortgage with a new one, typically with more favorable terms.
You might refinance for a lower interest rate, to reduce monthly payments, or to change the loan’s duration. This process can potentially save you money over the life of the loan or provide extra funds for other financial goals.
Additionally, refinancing may allow you to switch from an adjustable-rate mortgage to a fixed-rate mortgage or vice versa. Keep in mind that the decision to refinance should align with your long-term financial strategy and consider the current state of the housing market.
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Refinancing offers a variety of benefits based off your specific situation and end goal. See a few of the potential benefits below.
| Lower Interest Rates | Lower Monthly Payments |
| Pay Off Loan Early | Access Equity |
| Lock in a Fixed Rate | Eliminate Private Mortgage Insurance (PMI) |
One of the most overlooked benefits of the VA Loan is the ability to refinance using a VA IRRRL.
A VA IRRRL is one of the top refinance options available! Often called a “streamline” refinance for a reason, it offers huge benefits with very simple steps and few downsides.
A VA streamline refinance is best if you already have a VA loan, you’re hoping to get a lower interest rate to save money, and you don’t want to take cash out from your home equity.
To take advantage of a VA IRRRL, you must meet the following requirements:
- You already have a VA-backed home loan, and
- You’re using the IRRRL to refinance your existing VA-backed home loan, and
- You can certify that you currently live in or used to live in the home covered by the loan
| No Appraisal | Minimal Income Verification |
| Minimal to No Credit Score Requirements | Can Close Very Quickly |
| Little to No Out-of-Pocket Costs | Reusable |
A VA backed cash-out refinance allows you to replace your current VA loan with a new one under different terms.
Eligible borrowers can use a VA cash-out refinance to access the equity they have in their home. You can use this cash to make improvements on your home, pay off other debts, eliminate school loans, etc.
To take advantage of a cash-out refinance, you must meet the following requirements:
- You qualify for a VA-backed home loan Certificate of Eligibility, and
- You meet VA’s—and your lender’s—standards for credit, income, and any other requirements, and
- You’ll live in the home you’re refinancing with the loan
Connect with a VA Specialized Lender
Provide Certificate of Eligibility (COE) or work with your lender to obtain your COE
Provide Additional Documentation
Close on the Loan!
When thinking about refinancing your VA loan, it’s important to keep the closing costs in mind. Your number one goal when analyzing a potential refinance is to make sure the benefits and savings outweigh the overall closing costs.
Our VA loan specialists can walk with you through your specific closing costs based on your situation. For some refinances, you may be able to roll your closing costs into the loan.
Examples of potential closing costs:
VA Funding Fee
Discount Points
Loan Origination Fees
VA Appraisal
Credit Report
Taxes
Title Insurance
Recording Fees
| Loan Type | First Use Fee | Subsequent Use Fee |
|---|---|---|
| VA IRRRL | 0.5% | 0.5% |
| VA Cash-Out Refinance | 2.15% | 3.3% |
To get started on a VA Refinance you will want to get in touch with a military specialized lender to determine your eligibility. From there, your lender will request documents to help determine the best possible refinance option available to you. Refinances tend to move a little more quickly than home purchases, so after you select the best option, expect a short journey to the closing table!
Helpful Resources
A straight-forward guide to the VA Loan. Download and print for a resource on the go.
Home buying is a journey. Use this roadmap to plan your next steps into home ownership.
A mortgage calculator made for active duty military. Compare your BAH rate right alongside your potential mortgage payment.
