The VA streamline refinance loan gives veterans the chance to refinance their VA loan with little verification required. Not only that, but the loan costs you less than the original VA loan used to purchase your home.
If you are thinking of refinancing your VA loan, you may want to consider the VA streamline refinance.
Keep reading to learn the benefits of this loan program.
You Don’t Need Great Credit
If you’ve held off refinancing because you know your credit history has a few blemishes, you’ll love the VA streamline loan. The VA doesn’t require lenders to pull your credit. This means you could have a bad credit score and still qualify.
Now we will tell you to proceed with caution if you truly don’t want your credit pulled. Some lenders add their own requirements onto the VA’s requirements, which means they may pull your credit. A simple question when you shop around for lenders will let you know if that’s the case or not. There are plenty of lenders that don’t pull credit. You just need to shop around to find one if that’s what you need.
You Could Owe More Than the Home is Worth
Some homeowners are still struggling with the housing crash and what it did to the value of their home. If you live in an area where the home’s values aren’t quite up to where they should be yet, you may be upside down on your mortgage. This means you owe more than the home is worth.
Normally, this would be an automatic denial for a loan. Lenders don’t want to loan you more money than the value of the collateral you provide (your home). With the VA streamline loan, though, you are able to refinance even if you are upside down on your loan.
This can be helpful if you want a lower interest rate and/or payment but know that you can’t refinance with any other program. The lower payment can give you a chance to get ahead on your principal if you can make extra payments. This way you can get yourself out from underwater faster.
You Can Have a Different Job
Generally, the VA allows lenders to use all of the qualifying information from your original VA loan with the exception of your mortgage payment history. You must be able to prove that you paid your mortgage on time for the last 12 months.
What the VA doesn’t say is that veterans have to be at the same job when they apply for the VA IRRRL. Lenders don’t have to verify your employment. The VA feels that as long as you have a timely mortgage payment, they don’t have to verify where you work and how much money you make.
You Could Save Money
Chances are that the reason you want to refinance is to have money. The VA streamline refinance loan makes that possible. In fact, it’s one of the few requirements of the program. You have to show that there is a net tangible benefit for the refinance. If you can get a lower interest rate or shorter term, that’s benefit enough to qualify.
As you know, the VA limits the closing costs veterans can pay. Because of this and the limited nature of the VA streamline loan, you won’t have to pay a lot of fees out of pocket. The VA funding fee is also less than you paid when you bought the home. It’s only 0.5% of the loan amount, rather than 2.4%.
The Process is Quick
Unlike other loan programs, the VA streamline refinance can get to the closing table quickly. Once a lender verifies your mortgage payment history and your net tangible benefit, the rest is quick. The lender can get you to the closing table in a matter of a couple weeks rather than the standard 45 days it often takes to process any other refinance. This is largely due to the fact that the VA streamline loan doesn’t require an appraisal, so the lender doesn’t have to hold the loan up to wait for the third-party service to get the report done.
The VA streamline loan is a valuable program for veterans that will stay in their home and want a lower payment. While you can’t take cash out of the home’s equity, it’s a great way to get ahead. If you can save some money on interest each month, it may free up more money to help you pay down the principal balance of your loan. this way you can get ahead on your loan and pay less interest over its entirety.