Tuesday, July 25, 2017

VA Mortgage Loans: Purchase, Refinance, Cash Out, IRRRL, Streamline

By Justin Woodbury

The VA mortgage loan was created to assist the US veterans be more likely to qualify for a loan. The guidelines change constantly, so in order to figure out if you are eligible for sure, you should consult an industry professional. There are some general rules however and if you meet one of the following scenarios, you are probably eligible: Served for ninety consecutive days of active duty during war time; served one hundred eighty one days of active duty during peace time; have more than six yrs service in the National Guard or Reserve; are the spouse of a service member who died in the line of duty or as a result of a disability that was service related.

First of all, you may use your VA Mortgage Loan to purchase a home! This will, in some cases, allow a veteran to purchase a home with no money down, or 100% financing. This means that if your home appraises for $300,000, you may be able to secure a loan for the full amount. By comparison, if you were to purchase a home with a conventional mortgage loan, you generally would need at least 5% cash as a down payment in order to be approved. If you compare the VA loan to the FHA mortgage loan, you would still need at least a few percentage points worth of cash in order to get the loan.

Secondly, once you have a VA mortgage loan, you may refinance it in the case where you would like to change the rate, if you now qualify for something lower; you may change your rate type such as going from an adjustable to a fixed rate or from a fixed rate to an adjustable rate. You may change the term of the loan, such as refinancing from a 30 year mortgage to a 15 year in order to save money on interest; or you may refinance your 15 year mortgage to a 30 year loan in order to save money monthly. In these scenarios, you may also be able to do what is called an Interest Rate Reduction Refinance Loan (IRRRL) or sometimes called a streamline, which often lowers overall cost associated with a refinance, and is often much faster to process.

The Cash Out Refinance is another highly effective way to utilize your VA mortgage loan and home owner's equity. Many home owners are using the Cash out refinance to pull equity out of their home to do things such as build a deck, remodel, or even add a room or have solar panels installed! Many home owners are also using their home equity to pay off high interest or revolving accounts such as credit cards, this may help you in your quest to become debt free.

Like most refinances, there are sometimes costs associated. In the case of the VA loan you sometimes have a funding fee or closing costs. This funding may be able to be waived in some scenarios though so you should contact a loan specialist or mortgage broker to find out which loan program would best suit your goals and eligibility.

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