VA Refinancing

VA refinancing has many advantages over conventional refinancing loans in today's market. Take a look at some of the benefits:

• Veterans are eligible to borrow up to 100% of the money required to refinance a home with VA mortgage loans.
  
  
• VA refinance does not require mortgage insurance.  Normally, with conventional financing, if the borrower does not put down at least 20% of the purchase price of the home, mortgage insurance will be required by the lender.  Since mortgage insurance can be anywhere from a few dollars a month to hundreds of dollars a month this can be a significant savings for someone refinancing using VA home loans.
  
  
• VA refinancing will permit the seller to pay all your closing costs from the date of the sale through the last day of the month.  This can include such pre-paid items as homeowners insurance, interest, and/or taxes.
  
  
• While a VA mortgage is not intended for bad credit refinancing, the guidelines for credit score, income, and debt vs. income are less stringent than for a conventional mortgage.
  
  
• Generally, when refinancing mortgages, there are requirements for the borrower to have enough cash reserves in the bank to cover from two to six mortgage payments. VA refinancing does not require any cash reserves so it is much easier for the veteran to qualify for the loan.
  
  
• Closing costs associated with VA refinancing are normally less than with a conventional loan since there are no unnecessary fees allowed.
  
  
• VA loan rates are often lower than other refinancing mortgage rates.  With all the advantages listed above it would seem that the rates should be higher but, fortunately for the veteran, that is not the case. 
  
  
• VA streamline loans are available for homeowners refinancing an existing VA loan who would like to lower their interest rate.  Typically, you can use the VA streamline loan program without any out-of-pocket expenses, no appraisal, no credit check if you are current, and no job requirement; the only basic requirement is that your current mortgage is a VA loan.
   

The only drawback of any consequence for using VA refinancing programs is that the inspection guidelines for a VA loan are stricter than for a conventional loan.  When a home is inspected by a VA appraiser it will be given a more thorough inspection than a conventional loan and it may not pass inspection if it is in need of repair.  In today's market many homes which are owned by banks may fall into this category since banks in general are not interested in doing repairs, just in selling the homes they own.

If you run into this situation--finding a bank owned home which will not pass VA inspection--you can still present an offer to the bank subject to the bank making the necessary repairs.  While banks typically do not like dealing with repairs they will probably accept any reasonable offer just to get the property off of their books.

Overall, VA refinancing is hard to beat--no down payment, a lower interest rate, no mortgage insurance required, no cash reserves needed, ability to allow the seller to pre-pay certain expenses, and easier credit and income guidelines.  Be sure to take advantage of these benefits if you are eligible for this type of loan.