VA REFINANCE: TYPES OF REFINANCING

2007-03-08 10:33:40

( Financial )



VA refinance is designed for veterans to refinance their current mortgage. It is a special benefits provided by the federal government to veterans currently holding a mortgage. The Department of Veterans Affairs guarantee the VA refinances loans. There are three types of va refinancing such as cash out refinance, va streamline refinance and conventional to VA refinance.

Cash out Refinance

VA refinance is cash out refinance where a current mortgage is repaid from the sale of the same mortgage. It is used for real estate properties considered as the principal residence of the borrowers. An owner can refinance up to ninety percent of the appraised value of his property. There is no required minimum time to stay in your homes. However, the home must have enough equity to qualify for a VA refinanace.

Streamline Refinance

VA refinance is also an interest rate reduction refinance loan which offers homeowners reduced interest rate even in the absence of an out of pocket cost from the borrowers. Also, it requires very little documentation which makes its approval faster. Veterans who already have existing VA loans usually access streamline refinance.

Other benefits of streamline refinance include absence of the following: maximum loan amount, monthly mortgage insurance, and appraisal. The funding fee is peg at five percent.

Conventional to VA Refinance

A funding fee is required for conventional to VA refinance which can be charged to the cost of the loan. The government charged such fee to ensure the loan. It has no monthly mortgage insurance and out of pocket closing costs. Veterans with less perfect credit can avail of lower interest rates offered to those with good credit.

It is recommended that you should consult with the Department of Veterans Affairs when applying for VA refinancing. It helps borrowers who are facing financial difficulty by offering leniency for them. Thus, it is better for borrowers to have a representative from the Department of Veterans Affairs present during the home buying process.


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