VA or Veterans Affairs mortgages are the lifesavers for many homeowners who are struggling to refinance their conventional loans. There are many factors that have led to a surge in demand for VA refinancing from firms like Flagship Financial, and tighter underwriting standards is one of them. What gets VA loans a better rating compared to other forms of refinancing is the fact that homeowners can refinance the entire value of the home without paying mortgage insurance. Other loans require a significant equity in the house.
Veterans can avail VA loans for lowering their interest rates especially when the market continues to stabilize. This means members of military on active duty and members of the National Guard can refinance without hassles through VA loans. The interest rate reduction refinancing loan popularly known as IRRRL lets homeowners reduce their existing VA home loan monthly payments or shorten the loan terms to a considerable level. Another notable advantage of refinancing loans through VA programs is that the entire process involves minimal documentation work. In other words, VA loans don’t require appraisal for refinances or credit check under interest rate reduction refinancing loan although some lenders may still insist on this based on their internal rules and regulations. In essence, interest rate reduction refinancing loan offers a more streamlined, straightforward approval and underwriting.
In today’s economy, there is a natural tendency for new homeowners who are veterans to feel that VA loans are the best elements in the interest rate equations. This is true in reality as there is nothing more important to a struggling homeowner than being able to reduce interest rate. The homeowner’s needs and basic facts like this are clearly conveyed in the loan documents of VA loans, and even more important, are the catalyst to ease their financial woes. In addition, borrowers refinancing through some programs pay lower funding fee than other VA loan options. However, VA refinancing cannot be used to pay off second mortgages as that require approval from the second lender. There are options where cash-out refinancing is possible for veterans who have equity in their homes and who are already on VA refinancing program.
Cash-out refinancing allows homeowners to merge multiple mortgages into one and refinance them in one bundle. The new loan lets borrower pay off first and second loans and is easier to process than IRRRL program. Some options also allow homeowners who have equity in their homes to get cash back during the refinancing process. This may not be the case in all VA loan options but most lenders let homeowners refinance up to 100 percent of the property value to pay off previous mortgages. In general, VA loans should be sufficient for veterans who are homeowners to sleep worry-free.