If you haven’t refinanced your home you could be missing out on big savings. In fact, more than eight million homeowners are leaving cash on the table by not refinancing. While this number changes every year, what doesn’t change are the benefits of refinancing, especially as a VA Loan borrower. In this article, you’ll learn about the benefits of refinancing as a VA customer and how you can take advantage of them.
Why a VA Refinance?
The benefits of refinancing any type of loan can add up, especially when it comes to your home mortgage. With a refinance, you have the opportunity to:
- Lower your interest rate
- Refinance a Conventional or other mortgage into a VA Loan
- Use your home equity for cash
Lower Your Interest Rate
Refinancing your loan can often decrease your interest rate anywhere from .5 to 1%. This may not sound like a large drop, however, it can end up saving you thousands over the course of your mortgage!
To see how much a refinance would save you, do some calculation on our handy Payment and Amortization Calculator.
Refinance into the VA Loan Program
Many homeowners purchased their home before they were eligible for VA benefits and may have a conventional mortgage with private mortgage insurance. Refinancing your loan into a VA loan will eliminate private mortgage insurance and allow you to experience the benefits of the VA loan program.
Use Your Home Equity for Cash
With a cash-out refinance, you can take money out of your home equity to use for a variety of reasons, including paying off debt, paying for school or other finances. Read on for more information on a cash-out refinance.
Two Options for a VA Refinance: Streamline and Cash-Out
When you refinance your VA loan, you can choose between the “streamline” option or a cash-out refinance.
A VA streamline refinance, or interest rate reduction refinance loan (IRRRL), will help you refinance into a lower interest rate and as a result, lower your monthly payment. A VA cash-out refinance will help you tap into your home’s equity and use the money from it for other purposes. The VA cash-out is not a home equity loan, which is a second loan that runs parallel to your current mortgage. Instead, it completely replaces your existing mortgage.
Which Option Is Best?
Your best choice will be determined by your personal needs and financial situation.
A VA streamline is best for:
- Existing VA loan borrowers who want to refinance
- Those who want a lower monthly mortgage payment
The VA cash-out refinance is best for:
- Borrowers who want to refinance into the VA loan program from another loan type
- Those who want to extract equity from their home for usable cash
Whichever option you choose, you’ll be sure to reap the benefits of a refinance.
If you are ready to refinance now or want to talk to a Homebridge Mortgage Loan Originator about your options, fill out the form below and a Mortgage Loan Originator in your area will be in touch shortly.