The US Veterans Affairs Administration has helped provide home loans to veterans since 1944. The program allows both veterans and active duty members to obtain affordable mortgages that the VA guarantees lenders will repay. The program has been expanded to include the refinancing of these loans and is subject to certain restrictions.
Use of VA Loan Eligibility
To qualify for a refinance loan through the VA, you must have used your original home eligibility. In other words, it has to be a VA loan to VA refinance. A new certificate of eligibility is not required. Your previous certificate of entitlement serves as proof of the use of your entitlement.
VA refinance loans are subject to certain loan limits defined by the program. These limits limit the liability amount for the repayment required by the program. Each county determines the amount of the loan limit. Generally, lenders will approve up to four times the base claim amount of $36,000 for a no down payment home loan.
A financing fee is required for anyone applying for loans through the VA Guaranteed Loan Program. Payment of the fee is required at the conclusion of the loan. You can either pay the subsidy fee in cash or include it in the financing of the property. The funding fees can be between 0.5 percent and 3.3 percent. The funding fees for the second use of your funding authorization are usually higher than for the first use. Certain veterans with disabilities and surviving spouses do not have to pay a sponsorship fee.
Refinance loan with rate cut
The program enables refinancing of up to 100 percent of the home’s value. Although credit checks and reappraisals are not required under the program, lenders may impose these requirements under their own rules. Unlike a VA purchase loan, you don’t have to certify that you will live in the home. You only have to certify that you have lived in it before. The IRRRL program cannot be used to pay off a second mortgage. In principle, the second mortgage must be approved. Your current mortgage payments must be current with no more than one 30-day late payment in the last year.
Refinance loan with disbursement
If you want to take cash out of your home for medical expenses, kids’ college, or home improvement expenses, the VA offers a cash-out refinance program that allows you to use your equity to fund those big expenses. The above requirements apply to these loans in a similar way. You can also refinance up to 100 percent of the property’s value. Unlike the IRRL loan, a credit report, income check and property appraisal are required. You must also certify that you will live in the refinanced home.
Certain costs associated with refinancing may increase the cost of the loan to an amount greater than the market value of the property. These costs may include state and local taxes, discount points, and other closing costs. Applicants for refinance should always consider these additional costs when determining whether refinancing their VA loan is a viable idea.