Refinancing With a VA Loan

Refinancing With A VA Loan

A servicemember can use their VA loan benefit to refinance an existing VA loan or to refinance another type of loan (e.g. FHA, USDA or Conventional) into a VA loan.

In refinancing an existing VA loan the servicemember has two options:
1) Obtain an Interest Rate Reduction Refinance Loan; or, 2) Obtain a VA cash-out loan.

VA Streamline (Interest Rate Reduction Refinance Loan)

The Interest Rate Reduction Refinance Loan, or VA Streamline as it’s sometimes known, is specifically designed to permit the servicemember to lower their interest rate and payment, quickly and easily. This is accomplished by VA relaxing the underwriting guidelines and eliminating certain paperwork, including:

  • No paystubs or W2s are required
  • No bank statements are required
  • No home appraisal is required
  • There is no loan-to-value limitation because no appraisal or value is required.
  • Underwater homes are eligible (homes on which the servicemember owes more than the home is worth)
  • The required funding fee is lower than for VA purchase loans
  • Closing costs can be wrapped into the new loan, meaning little or no out-of-pocket expenses
    VA Cash-Out Refinance

    VA permits the servicemember to access equity in their home by obtaining a VA cash-out refinance. This is done by the servicemember obtaining a VA loan that’s greater than their current loan, paying off the current loan, and receiving (i.e. pocketing) the difference after the new loan closes. VA will allow the servicemember to refinance up to 100% of the value of the home. Proceeds can be use for any purpose including debt consolidation, traveling, starting a business, college tuition, investment, or any other need or desire the servicemember may have.

The second purpose for the VA cash-out refinance is to pay off a loan that’s not currently a VA loan. For example, assume the servicemember bought a $410,000 home with FHA financing three years ago, and the monthly payment includes $280 for FHA mortgage insurance. After learning more about their VA loan benefit the servicemember realizes that VA does not charge monthly mortgage insurance. By simply refinancing from FHA to VA the servicemember saves $280 per month.

Until the next post … may health and happiness abound!


Hello World!!

Hello World!!

Welcome to the FIRST EDITION of the VA Information Portal Blog. This blog is a resource of the Sidwell Companies.

And so, it’s come to this. After more than 20 years of arranging mortgages in the state of California and encountering every type of borrower, loan program and mortgage scenario imaginable, we’ve been told that we must start blogging. Our millennial associates insist that such knowledge has to be shared. With that in mind, treasured reader, please be empathetic as we make our first foray into the blogosphere. Does this blogging thing require some type of license? Should it?

The objective of this blog is fairly simple. First and foremost we want to make servicemembers aware of their VA Home Loan Benefit. In a 2014 survey of 2,000 members of the Iraq and Afghanistan Veterans of America (IAVA) association, only 36% said they had applied for a VA home loan. The percentage is so low because many veterans were never made aware of the benefit. Sidwell Mortgage is changing that.

Secondly, we want to explain VA home loans in a clear, understandable and sometimes funny manner. The goal is to remove fear and intimidation from the mortgage lending process. We understand that in life Stuff Happens! And in military life Stuff Really Happens! Regardless of the circumstance there’s usually a way for the servicemember to buy a home, or at least start down the path to home ownership. We want to show you that path.

We’ll also discuss topics and post videos that don’t always relate to mortgages, but are nonetheless engaging and rewarding.

So thanks for reading our first blog and I look forward to you joining us for future posts. You can even subscribe so you won’t miss a word.

Until the next post … may health and happiness abound!