By Kevin Holton, Wilmington, NC Branch Manager, AAFMAA Mortgage Services LLC
If you’ve been debating whether or not you should refinance your current VA mortgage (i.e, replace it with a new one), it’s time to settle the debate. Doing so could help you save each month, leading you to a lower interest rate, shorter loan term, lower monthly payments, or some combination of those.
How Do I Choose a Refinance Option?
There are two options you can choose from to refinance your VA Home Loan: A streamline refinance or a cash out refinance.
- A streamline refinance, also called an Interest Rate Reduction Refinance Loan (IRRRL), is truly a streamlined process, requiring no appraisal of your house and minimal documentation from you when you simply want to pay off your existing VA Home Loan with a new mortgage.
- A cash out refinance enables you to tap into the equity of your home to get money for home improvements or other major expenses. It requires you to provide evidence of income and employment for all borrowers who will appear on the loan application. You’ll also have to provide W2 forms from the previous two years. Plus, many VA lenders will ask for copies of your federal income tax returns from the last two years.
This documentation helps lenders determine if your income will be sufficient to cover your new loan payment in addition to other monthly obligations you have, such as car loans, credit card payments, or student loan payments.
The lender will also pull your credit report, check your credit score, and order an appraisal. The appraised value of your home determines the maximum loan amount and how much cash may be available to you. Under new VA guidelines, if the loan meets the certain requirements, you may be able to borrow up to 100% of the appraised value. Benefits of refinancing a VA Loan may include:
- Elimination of mortgage insurance (public, private or guaranty)
- Shorter loan term
- Lower interest rate
- Lower monthly mortgage payment
- Increase in the borrower’s monthly residual income
- Equal to or less than 90% of the appraised value of the home
- Moves the borrower from an adjustable-rate to a fixed-rate
It’s important to note that just because you can get up to 100% of your home’s appraised value in a cash out refinance, you aren’t required to borrow the full amount.
Should I Refinance?
Because interest rates are near historic lows, if you refinance your 4%+ VA Loan right now, you might be able to save money each month. Check our current rates here, then use the AMS Mortgage Rate Comparison Calculator to see how different interest rates would impact your monthly mortgage payments.
If you’re not certain whether or not it’s the right time for you to refinance, please contact us. You’ll get an honest and fair comparison of your mortgage situation and a wide range of low-rate and low-cost mortgages to choose from, all designed to meet your needs. You should get the best mortgage possible, even if it means doing business elsewhere. That is our mission — making sure servicemembers and Veterans get the best mortgage for their needs.
Get your free mortgage assessment from AAFMAA Mortgage Services today. Call 844-247-4208 or email [email protected] to get in touch with one of our licensed Military Mortgage Advisors serving your area.
Use our calculators to help determine if refinancing is the best option for you.
Kevin Holton, Individual NMLS #89025, is currently the Branch Manager in Wilmington, NC with AAFMAA Mortgage Service LLC and has over 25 years of experience in the mortgage industry. Kevin is deeply involved in his community and shares a passion for assisting the military community with their mortgage needs.
AAFMAA Mortgage Services LLC is an Equal Housing Lender. All loans subject to credit approval. This is not a commitment to lend. See a complete list of state licenses and disclosures at www.aafmaa.com/mortgage.
NMLS #1423968, see: https://nmlsconsumeraccess.org/. 1430 Commonwealth Dr. Ste. 202, Wilmington, NC 28403 NMLS# 1754158