Veterans Administration refinances home loans

With interest rates on home loans still at very low levels, everyone with a mortgage would be wise to assess whether a refinance would make sense.

Veterans with existing VA loans have several benefits involved in the Interest Rate Reduction Refinance Loan. This loan product is for a VA to VA refinance. The veteran can take up to $500 in cash at the closing table.

Generally, there is no requirement for appraisal, minimum credit score, W-2, pay stubs or even debt-to-income ratios.

The loan does need to meet a “make sense” calculation. The fees incurred with the loan divided by the amount saved each month in payments cannot exceed 36 months. The cost has to be able to be recouped by the veteran in three years or less.

The certificate of eligibility is required to confirm if there is a waiver of the funding fee. If an upfront funding fee is required, it is reduced on this loan product. Instead of 2.15 percent on a first-time use of eligibility or 3.33 percent on a subsequent use, the fee is only .50 percent.

A 12-month history of mortgage payments is needed. The most recent seven months of payments must have been made on time.

On a primary home, an appraisal is not needed unless the veteran is paying discount points to buy the rate down even further.

If the home is an investment property, the borrower needs to have a credit score of at least 660. Also, the applicant must provide documentation and certification that the investment property was initially the primary home.

To check to see if a refinance of your home loan would make sense, talk with a trusted licensed mortgage professional.