When Should I Refinance My VA Loan? Buying a home is one of the best ways a person can build long-term wealth. For those that are looking to buy a home, finding the right mortgage is a very important decision. For those that are former, or current, members of the US Armed Forces, a great option would be to take out a loan from the Veterans Association. While VA home loans have many advantages for homebuyers, those with an existing loan may still want to consider refinancing their loan into a new loan. There are several situations in which you should consider refinancing your VA home loan. Equity Position Has Increased One situation when you should consider refinancing your VA mortgage would be if you have seen a large increase in your home equity. The VA home loan program offers members of the VA the chance to purchase a home with as little as zero percent down. While this can make it easier to buy a home, zero percent down mortgages come with higher interest rates and the requirement to pay PMI. If you have been in your home for a few years, there is a good chance that you have seen large improvements in home equity through principal pay downs and value appreciation. If you now have twenty percent equity in your home, you could qualify for a new mortgage with a lower interest rate and no PMI requirement. This could easily save you thousands of dollars per year. Better Credit Score Another situation in which you should refinance your VA home mortgage is if you have a better credit score than you did at the time of application. The VA home loan program has a much more lenient policy than traditional banks when it comes to credit scores. However, if you have a poor credit score and are approved for a loan, you will still be charged a higher interest rate. After making successful payments for a few years, your credit score could improve dramatically. In this situation, this could allow you to refinance into a much more affordable mortgage. Lower Interest Rates If mortgage interest rates across the entire industry have decreased, it would also be a good idea to refinance. Mortgage interest rates have been low for several years now, but there is always a chance that they could decline further. If mortgage rates have decreased since you have bought your home, you should be able to refinance into a lower rate mortgage. This could end up saving you a lot of money on interest on an annual basis.
Recast Your Payment If you have had your home and VA loan for a while, another time that it would be good to refinance your loan is if you are looking to lower your payment by recasting the loan. Over a long period of time, you outstanding balance will be paid down by a large amount of money. At that point, you will then have the option of taking the outstanding balance and refinancing it into a new 15 or 30-year mortgage. Doing this could drop your monthly payment considerably. Mortgage Originator Jimmy Vercellino, specializing in VA Loans, helps veterans use their VA loan benefit to their greatest advantage. For more details call us at
480-351-5904. Visit site: https://www.valoansforvets.com/va-pre-loan-faq/ The views expressed here are those of the individual author and do not necessarily represent those of First Choice Bank (NMLS #: 177877) and First Choice Loan Services Inc. (NMLS #: 210764), 7600 E. Doubletree Ranch Road, Scottsdale AZ 85258. Equal Housing Lender. www.fcloans.com/disclaimer/ www.fcbhomeloans.com/privacy