Refinancing in 2010 is tough in many parts of the country. Why? It is tough because of the severe “correction” we have had in home values over the past few years. Home values have come down which is causing problems for many folks who want to refinance but cannot meet program guidelines centered around your home’s value relative to the home’s mortgage balance. In general, for a mortgage to get approved the home’s value must exceed the mortgage balance.

If you are fortunate enough to have a VA mortgage you may be able to refinance your current VA mortgage using the VA’s streamline refinance program without having to meet the home value and mortgage balance requirement that I just mentioned. The VA streamline program does not require an appraisal (according to the VA – see below for specific mortgage lender specifics) so if you are in a situation where you home’s value is less than your mortgage balance you may still be able to qualify to refinance your home using this program.

However, if you are not upside down on your mortgage balance and your home’s value and if are looking for some cash out on your home to do some debt consolidation, or minor home repairs, you may want to consider the VA cash out refinance loan program.

The VA cash out mortgage program is good if you already have a VA loan and want to refinance, or if you don’t have a VA loan, but want one and are eligible for one. Some other reasons to consider the VA cash out refinance loan program include:

• competitive mortgage rates,
• no PMI (this is a big cash savings when compared to other loan programs like Fannie Mae, Freddie Mac and FHA),
• you can defer a few mortgage payments,and
• you can be set up to refinance using the VA streamline refinance program if rates drop in the future.

Unlike the VA streamline refinance, the VA cash out refinance will require you to get an appraisal and qualify for the mortgage with your income, assets, and credit. If you decide to go for this program, the VA will let borrow up to 100% of your home’s value with your new loan. (Lender Caveat) However, many lenders in 2010 are capping the new loan amount to not exceed 90% of the home’s appraised value. Also, some mortgage VA lenders are requiring an appraisal and income/employment documentation even for the VA streamline refinance.

You will need to talk to a VA loan officer who specializes in VA loans to see what options you have for your situation.

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