2016 VA Refinancing Guidelines

2016 VA Refinancing Guidelines Explained

The United States Department of Veteran Affairs is the government entity that is responsible in setting and implementing mortgage lending guidelines and regulations on VA Loans. VA Loans are originated and funded by banks and mortgage companies who are approved by the U.S. Department of Veteran Affairs and VA Loans are guaranteed by the Department of Veteran Affairs in the event the veteran defaults on his or her VA Loan. VA Loan is probably the best mortgage loan program out there where it does not require any down payment on a home purchase and a homeowner can refinance their home with a VA Loan and do a 100% loan to value cash-out refinance mortgage. Unfortunately, VA Loans is not for everyone. You need to be a veteran of the United States Armed Services with a honorable discharge and have a Certificate Of Eligibility. VA Loans offer the lowest mortgage interest rates out of all mortgage loan programs. With mortgage interest rates still being at historical lows, many veterans with a Certificate Of Eligibility are rushing into exploring refinancing their home with a VA Loan.

2016 VA Refinancing Guidelines: Net Tangible Benefit And Break Even Point

2016 VA Refinancing Guidelines state the requirements on refinancing a home loan into a VA Loan. The main reason most homeowners refinance is to lower their monthly mortgage payments by refinancing their home loan to a loan with a lower mortgage rate and save money.  A refinance mortgage loan will pay off an existing home loan and replaces it with a new mortgage loan. Homeowners who refinance their current mortgage loan can expect to go through the same mortgage process as when they first went through their home purchase mortgage loan. Before a homeowner commits to a refinance mortgage loan, they should consider that there are closing costs associated with refinancing a mortgage loan. Closing costs on a home refinance loan can add up to several thousand dollars so homeowners need to know how much money they will be saving every month and how long will the sum of the savings total the closing costs spent on their home refinance mortgage. This will determine the break-even point of their refinance mortgage loan.  For example if your new refinance mortgage loan on your new VA Loan will save you $200 per month and your closing costs will be $2,400, your break even period will be 12 months. It will take you 12 months in saving $200 per month to get your $2,400 in closing costs back from the refinance mortgage loan. After the 12 months, you will be break even from the refinance mortgage loan and your actual savings of $200 per month will begin. If you plan on selling your home in less than 12 months, it will not be worth your while to refinance your mortgage loan. However, if you plan on staying in your home for more than 12 months, it will make sense for you to refinance your mortgage loan. Everyone’s break even point is different and it may take some homeowners over 5 years to reach their break even point. However, if the homeowner plans on staying in their home for over 10 years or longer than taking 5 years to reach the break even point is worth it to refinance their home loan.

2016 VA Refinancing Guidelines: Benefits With Refinancing

Homeowners should only refinance their home loan only if it provides benefits to the homeowner from refinancing their home loan. The biggest benefit of refinancing their current home loan is to reduce their monthly housing payment so they can use the excess savings in paying other expenses or save.  Many homeowners take advantage of a 15 year fixed mortgage rate refinance mortgage loan because mortgage rates on 15 year fixed rate mortgage loans are substantially lower than 30 year fixed rate mortgage interest rates. Other major benefits with refinancing with a 15 year fixed rate mortgage loan programs is because with 15 year fixed rate mortgage loans, a homeowner will be able to pay down their mortgage loan balance much quicker and save tens of thousands of dollars in mortgage interest expenses. Homeowners who have equity in their homes and are in need of cash due to repairs needed or pay off debts, VA mortgage borrowers can get up to 100% loan to value cash-out refinance mortgage loans at low interest rates.

2016 VA Refinancing Guidelines: Refinancing To VA Loan From Other Loan Programs

VA Loans is probably the best mortgage loan program in this country. VA Loans offer zero down payment and since the VA Loan is insured by the United States Department of Veteran Affairs, VA mortgage lenders have nominal risks when originating and funding VA Loans because in the event the veteran defaults on his or her VA Loans, the Department of Veteran Affairs guarantees a portion of the VA Loan. Due to the guarantee by the Department of Veteran Affairs, VA mortgage lenders can offer veterans low mortgage rates on VA Loans. VA Loans mortgage interest rates are substantially lower than FHA Loans and Conventional Loans. Many veterans who did not purchase a home with a VA Loan and bought their home with a FHA Loan, Conventional Loan, or  USDA Loan can refinance their current mortgage loan with a VA mortgage loan. Veterans who need a cash-out refinance mortgage can refinance their current home loan with a VA Cash-Out Refinance Mortgage Loan and get up to 100% loan to value on their VA Cash-Out VA Refinance Mortgage Loan.

2016 VA Refinancing Guidelines: Cash-Out Refinancing On Other Loan Programs Versus VA Loans

The real estate market has been recovering throughout the United States. Areas in Florida, Illinois, Texas, and California have had double digit increases of property value year after year for the past several years. Many homeowners have seen phenomenal increases of their property values due to the hot real estate market. Homeowners in need of cash can do a cash-out refinance mortgage loan and draw cash out of the equity in their homes and use it for other investments, pay off credit card debt, pay off tax liabilities, pay off student loans, or pay off other debts or just have cash ready in the event of a rainy day. FHA Loans require a maximum of 85% loan to value on a FHA cash-out refinance mortgage loan. With Conventional Loans, the maximum loan to value on a cash-out refinance mortgage loan a Conventional mortgage loan borrower can get is 80% loan to value. USDA Loans prohibit cash-out refinance mortgage loans and a USDA mortgage loan borrower can only do a rate and term refinance mortgage. The United States Department of Veteran Affairs, or VA, will allow up to 100% loan to value cash-out refinancing on VA Loans.

If you are a veteran with a Certificate Of Eligibility and are interested in a home purchase VA Loan or a Refinance VA Loan, please contact me at 262-716-8151 or email me at gcho@gustancho.com. I am available 7 days a week to take your phone calls or reply to your email inquiries on VA Loans or any other mortgage loan program.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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