If you have already used your VA loan, you may still benefit from working with a lender to get better terms. Called “refinancing,” this process is similar to the home buying process but does not include the home search or contract negotiations.
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)
An Interest Rate Reduction Refinance Loan (IRRRL) may reduce a payment or move an existing VA-backed loan from an adjustable rate to a fixed rate. Closing costs and a VA funding fee may apply. Financing costs into the new loan or covering them through lender pricing does not make a refinance cost-free. Read the official guidance.
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.
A VA cash-out refinance may replace an existing VA or non-VA mortgage. Borrowers need an eligible Certificate of Eligibility and must meet VA and lender credit, income, occupancy, and other requirements. The lender will review the loan amount and available equity. Read the official guidance.
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