Thursday, August 3, 2017

VA Mortgage Loan Options: Purchase, Refinance, Cash Out, IRRRL, Streamline

By Justin Woodbury

A VA loan is meant to help veterans of the United States Military get easy access to home financing. You will of course need to consult a mortgage specialist in order to determine your eligibility, because guidelines do change often. However, you should be able to qualify for one if you meet one of the following conditions: You have served 90 consecutive days of active service during wartime; You have served 181 days of active service during peacetime; You have more than 6 years of service in the National Guard or Reserves; You are the spouse of a service member who has died in the line of duty or as a result of a service-related disability.

First, you may utilize your VA mortgage loan to purchase a home, in this scenario you may sometimes make a home purchase with 100 percent financing. For example, let's say you have your dream home in your crosshairs, but the home appraised for three hundred thousand dollars. With the VA loan, you may be able to take out a loan for the full amount, and not have any down payment. You would still have closing costs associated, but with a conventional loan you would be required, in most scenarios to have at least five percent down, with a FHA loan about three percent down, and you will have mortgage insurance on top of it! With a VA Loan and as of this writing, there is no mortgage insurance required.

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.

Also, once you have a VA Mortgage Loan and you get to a point where you have some equity built up, you may essentially withdraw your equity from the home via a Cash Out Refinance. The money that you withdraw in this way may be used for many different purposes. For example, you may choose to use the money to improve your home by remodeling a kitchen or bathroom, doing a room addition, or even adding solar panels (which can sometimes allow for savings on electricity). Another scenario would be if you wanted to consolidate your high interest, revolving credit card debt, you may pay them off using a cash out refinance.

The costs associated with a veterans administration home loan will vary from lender to lender, they usually consist of the funding fee, which may be waived in some scenarios as well as closing costs. Most lenders now a days will have no cost options available however. Consult a licensed loan specialist, or mortgage broker today to see what your options are.

About the Author:

No comments: