You already own the home but are just seeking better financing. This may be the result of the market rates lowering, your personal financial situation improving, or the value of your home going up.
There are two main ways to refinance your VA loan.
Streamlined Refinance (IRRRL)
Also known as the Interest Rate Reduction Refinance Loan, or IRRRL, the Streamlined Refinance loan is easy to complete and often requires no money from the homeowner. This type of refinance simply adjusts the terms of financing and is great when interest rates have lowered since you purchased your home.
Cash-Out Refinance
A Cash-Out Refinance is exactly what it sounds like—you refinance to pull cash out of your home once you have paid down the loan and have equity. This can be a great option if you want cash to pay off other debts, pay for a large purchase, or do home improvements.
You can apply for a cash-out refinance for a VA loan, USDA loan, FHA loan, or conventional loan. The only limitations are placed by the lender on how much cash you can pull out and how much equity they require to remain in the property.
Keep in mind that refinancing may mean more interest costs over the life of the loan, so talk to your lender about all of your options before deciding on a refinance. If you are early into homeownership and interest rates have gone down, refinancing can be a great way to lower your monthly payments and even save money over the long-term
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Frequently Asked Questions
What is a VA Loan Refinance?
A VA loan refinance allows eligible veterans, active-duty service members, and certain military spouses to replace their existing mortgage with a new VA-backed loan. It can help lower monthly payments, change loan terms, or access home equity.
What types of VA refinance options are available?
There are two main types: the VA Interest Rate Reduction Refinance Loan (IRRRL), often called a “Streamline Refinance,” and the VA Cash-Out Refinance. The IRRRL is designed to lower your rate or payment with minimal paperwork, while the Cash-Out option lets you tap into your home’s equity.
Do you need to be currently using a VA loan to refinance with one?
Not always. The VA Cash-Out Refinance may be used to refinance a non-VA loan into a VA-backed mortgage, as long as the borrower meets eligibility and property requirements.
What are the benefits of a VA Streamline Refinance (IRRRL)?
The IRRRL typically requires less documentation, may not require an appraisal, and often allows lower closing costs. It’s designed to make refinancing faster and easier for eligible homeowners who already have a VA loan.
Can you take cash out with a VA refinance?
Yes. A VA Cash-Out Refinance lets eligible homeowners borrow against their home equity and receive the difference in cash. This can be used for home improvements, debt consolidation, or other financial needs.
