Veterans can still refinance their conventional, FHA or subprime loans into a new VA loan up to 100% of the value of the home. Most veterans have been mislead to believe that they can only refinance to a VA loan up to 90% of the value of the home. Although throughout most of the country this is true, the key for veterans is to not give up. These 100% “Regular Refinance” VA loans are still available and can offer up several benefits, one being a significant decrease in rate and payment.
You might ask, “If I were to refinance into a VA loan, what benefits would I expect to see?” Below are some examples of how refinancing into a VA loan could benefit you. If any of these examples fits your situation, you should seriously look into your options and consult a VA Loan Specialist soon.
VA Refinance Example #1
Veteran had purchased a house using a conventional loan, thus had to put 5-10% down and as a result, is currently paying mortgage insurance. The veteran can refinance into a new VA loan up to the lower of 100% of the value of the home or the payoff amount on his/her conventional loan plus any allowable fees, reasonable rate discount and new escrow.
VA Refinance Example #2
Veteran purchased a home with an 80/20 loan combo. S/he does not currently pay mortgage insurance; However the rates or combined blended rate is above the current VA refinance rates. So refinancing and lowering the rate and payment with a new VA refinance would be a benefit here.
VA Refinance Example #3
The veteran has a Jumbo loan and wasn’t made aware that when the house was purchased, a VA loan would have been the best rate scenario at that time. With Non-conventional and even conventional Jumbo rates being higher than VA Jumbo rates, the VA refinance makes complete sense as it would decrease the payment significantly and with no mortgage insurance.
VA Refinance Example #4
For one reason or another, the veteran purchased a house using an FHA loan, putting the standard 3.5% down at closing. With the fact that there is monthly mortgage insurance on FHA loans, and with a even the slightest drop in rate, refinancing into a new VA loan could be a big benefit on the monthly payment…especially when there is no mortgage insurance on VA loans.
Overall, there are many benefits of having a VA loan, but more importantly, refinancing into a VA loan that offers a lower rate and payment than your current loan only makes sense.