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VA Cashout Refinance – Use It For Debt Consolidation or More

July 20, 2010 Leave a Comment

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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Filed Under: VA loans

The VA Mortgage Refinance Not To Be Confused With The VA Streamline Refinance

June 22, 2010 Leave a Comment

If you have a VA home loan and want to refinance chances are you have your reasons for doing so. With this being the case you will need to know the difference between the regular VA mortgage refinance and the VA streamline refinance to make sure you get the right loan for your needs.

The VA streamline refinance is a great refinance program if you fit into allowable uses for the program. But if you do not fit into this program, the next best program if you wanted to stay with a VA mortgage would the VA Mortgage Refinance.

  • The VA mortgage refinance mortgage allows you get cash out whereas the VA streamline does not.
  • The VA mortgage refinance program allows you to consolidate debt as well as pay off an existing 2nd mortgage. The VA streamline mortgage does not.
  • If you are an eligible veteran, you can refinance your current conventional mortgage into a VA mortgage refinance mortgage. You can only use the VA Streamline mortgage if you already have a VA loan.

Some facts about the VA Mortgage Refinance

  • The VA Mortgage Refinance program is for eligible borrowers with existing VA mortgage or those with conventional mortgages (non-va).
  • You can reuse some or all of your eligibility to purchase a new home, or refinance your current mortgage. You will need to speak to a VA loan officer to determine your exact eligibility.
  • You will have to fully qualify for this mortgage similarly to what you had to do for a purchase mortgage. In other words you will need a VA appraisal, credit report with credit scores, proof of income with pay stubs and W2′s, and several months of bank statements. Note: these are the minimum documents you’ll need to gather if you are going to use this loan program.

Hopefully in reading this post, you got the message that the VA mortgage refinance is a versatile loan program that allows an eligible applicant many refinance options that fall outside of the program features associated with the VA Streamline.

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Filed Under: VA loans

VA Loans Can’t Move the Market But They Can Help A Vet Move

April 20, 2010 Leave a Comment

Vets who qualify for a VA Loan program have a home buying trump card that those who do not have access to this mortgage program when it comes to buying a home and being a first time home buyer.

According to a recent survey conducted by BBVA Compass, first time home buyers who have purchased a home within the past 12 months reported the following:

  • 51% indicated that the monthly expense of owning a home was more than they anticipated,
  • 87% indicated that they changed their lifestyle due to the increased unexpected expenditures, and
  • nearly 33% of those who experienced unexpected expenditures used a combination of cash or credit as payment.

With these three characteristics coming out of this study regarding first time home buyers, it seems to make sense that more Vets should look to take advantage of the VA loan than ever before.

Just about any seasoned loan officer can offer that the three of the top home buying hurdles in the current home buying market are:

  • I want my credit to improve,
  • I want to pay off some debt, and/or
  • I need to save some money for my down payment.

If you are Vet and having these conversations about home buying it is time for you to get in front of a VA Loan Specialist. A VA Loan Specialist who knows what they are doing will let you know about the VA Loan Benefits combat these three hurdles to make the VA Loan one of the best mortgage programs going today.

Benefits of a VA Loan:

  1. 100% financing – the only loan program in the US that still does not require any down payment.
  2. You can get a VA loan if you have FICO scores down to around 620 as long as your last 12 months of credit history is good and you have satisfactory explanations for any problems you may have had.
  3. VA loans allow a seller to contribute to the Vet buyer in a way that the contributed funds can be used to pay down some of the Vets debt at settlement.

With these three benefits, among many others, Vets who qualify for a VA Loan should consider buying a home. While the number of folks eligible for VA Loans isn’t likely going to change the real estate market any time soon, the VA Loan can sure help a Vet move into a home that they deserve.

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Top 10 Ways To Speed Up The VA Loan Approval Process

March 30, 2010 1 Comment

Military families and veterans looking to use their VA home loan benefits have experienced longer than normal processing and approval times in the past one to two years. Prior to our nation’s financial crisis in housing meltdown it was not uncommon for mortgages to go from application and in to funding within a few days or even less.

If you have tried to buy a home or refinance a home in the past year or so you have most likely experienced mortgage processing times that range anywhere from three weeks to three months.

Historically, those wanting to use their VA loan benefits have been taught or told that the process of getting a VA loan will be drawn out, full of surprises, and very difficult to accomplish. This has never been completely true, however because very few mortgage professionals understand the ends and outs of VA home loan financing the rumors did have some validity. The fact of the matter is that a VA home loan does not have any more or less paperwork than a non-VA or conventional mortgage. The reason mortgage processing and approval times have become longer and longer is due to the increased underwriting guidelines and restrictions imposed on the industry during the aftermath of the financial crisis in housing meltdown.

The following is a list of the top 10 ways in which veteran homeowners or of those eligible military families looking to purchase a home can speed up the approval process for either their VA purchase loan or their VA refinance.

Top 10 ways to speed up you VA loan approval and process:

1. Understand your VA loan benefits. Do your homework and research. The Internet is a great place to search for tutorial videos, blog posts, and other information about the VA home loan.

2. Shop for your VA lender before getting your loan into processing. Too many of veterans began the VA loan process and get a quarter to half way into the deal and then began to shop around for you a better deal and have wasted one to possibly even three weeks of VA loan processing.

3. Stick with your decision. If you have educated yourself and shopped for your lender upfront and made your decision to proceed, then don’t look back once you have started the process and you should have confidence in working with the VA lender that you chose.

4. State organized during the VA loan process. I suggest keeping a folder or binder with all of the communication between you and your VA loan officer. This folder should contain all of the documents that you will be required to send to your loan officer in any documentation or correspondence to your loan officer sends to you.

5. Be willing to take phone calls at work and on your cell. It is important that your loan officer can contact you at any time during the day. Unforeseen events can arise during the VA loan process in a quicker in which your loan officer is able to resolve those concerns, the quicker your loan will get processed and approved.

6. Be willing to work over the Internet and e-mail. We live in a society that does things online and is important that you’re working with a mortgage company that also is confident in working over the Internet. Much of the loan process can be accomplished without the need of drawn out phone calls and conversations.

7. Be willing to put forth effort. When I worked as a loan officer in the past I was amazed when my veteran clients wanted her loan to be processed quickly yet any time I asked for documents from them they took days or even weeks to get them to me. Please put forth as much effort on your own behalf as you requiring your VA mortgage company to do.

8. Be proactive. If a few days of online you have not heard from your VA loan officer then please make a phone call, send an email, or do whatever you need to do to get in contact with your loan officer.

9. Ask questions along the way. Many veterans will have questions or concerns during the loan process awake until the very end to ask them. If there’s something bothering you or something that you don’t understand you need to be comfortable early on in the process so that you do not cause unintended slowdowns near the end.

10. Do not ask for a quote from someone that has never gotten a VA loan. Nine times out of 10 if a veteran home owner talk to their accountant, investment manager, or anyone else they trust with their finances, the veteran will be told something incorrect. Understanding VA loans is easy if you’re experienced in working with veteran home loans, however those that do not have experience working with the loans will normally mislead the veteran unintentionally.

Using your VA home loan benefits is one of the best ways for you to either buy a home or refinance your current mortgage. Being prepared, educated, and willing to assist in getting your loan processed quickly will go a long way in speeding up your VA loan process.

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VA Streamline: Appraisal May Now Be Needed

May 7, 2009 1 Comment

Another day, another change that some investors are now requiring — this one for people who are currently in a VA loan and want to do a VA streamline refinance.

For as long as I can remember, the VA streamline refinance (aka the VA IRRRL program) did not require an appraisal for the borrower to participate in the VA streamline program and get a lower interest rate.

But that may be changing. Or, maybe a better way to say it is that it for sure is changing for some lenders.

As of recently, some lenders who lend money on these loans to require some form of an appraisal. Some lenders are now requiring a full blown appraisal, some are only requiring a drive-by appraisal — but the point is that many are now requiring it where before they did not.

Note: I haven’t heard anything about FHA/VA changing their criteria for what they will insure — so to my knowledge, an appraisal is currently not required in order for a VA streamline to be insured.

As an example, an announcement by Wells Fargo to all correspondent lenders said:

“in an effort to mitigate the risk of declining home values on VA IRRRL transactions on May 18th will require the seller to obtain and deliver a conventional appraisal to Wells Fargo. Please Note: VA has indicated this appraisal should not be submitted to the VA with the guaranty package.”

Does this really make any sense?

Not really.

But it isn’t the first time that things haven’t made sense to me in the mortgage market recently.

If you are in the market for a VA streamline and your loan officer is telling you that an appraisal is now required, be sure to ask him if he has access to any other VA lenders – many lenders are still not requiring VA streamlines to have an appraisal.

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Arizona VA Loans: Minimum Credit Score Now 620 With Most Lenders

March 26, 2009 Leave a Comment

Arizona VA loan guidelines are getting tougher.

If you are currently have an Arizona VA loan and want to participate in the Arizona VA streamline program (aka the VA IRRL program), lenders are requiring that you have a mid credit score of at least 620. If you are thinking about trying to qualify for an Arizona VA loan, you must also have a mid credit score of at least 620.

The minimum credit score of 620 requirement for all Arizona VA loans is regardless of what the Automated Underwriting System says about the file – in other words, there really isn’t a way around it.

In order to qualify for an Arizona VA loan, you will need to provide the underwriter with a copy of your credit report – or you can also provide only a mortgage report and score only, many lenders will accept this as well.

Will it change in the future?

I think it is safe to say that this requirement will probably change… but I can’t say whether it is going to get tougher or easier to get an Arizona VA loan and how soon it will change.

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VA Streamline Refinance Program: AKA The VA IRRRL Program

January 5, 2009 11 Comments

VA Streamline Refinance Program (aka The VA IRRRL Program)

The VA Streamline Refinance is designed to help veterans secure the lowest fixed interest rate available and is also known as the VA Interest Rate Reduction Loan program (IRRRL). This loan option is a way for current VA homeowners to lower their interest rate with very little or no out-of-pocket costs. The VA IRRRL Streamline is supposed to be “fast and easy” with minimum documentation requirements, it can help veterans start saving money on their monthly mortgage immediately.

VA Streamline Program highlights include:

  • No appraisal is required
  • Will not need to provide bank statements, W2s, job verification or paycheck stubs
  • You cannot receive any cash at closing
  • It is possible to roll all closing costs and prepaid items into the loan amount – so no out-of-pocket costs
  • You must be current on your existing VA mortgage and not have had more than one 30-day late mortgage payment within the last 12 months.
  • Upon closing, it is possible to defer a monthly mortgage payment
  • Within 30 days of closing, you will receive the money that was held in your old escrow account because a new escrow account will be set up with your new loan


VA Streamline Refinance Information from VA.gov

“Veterans are strongly urged to contact several lenders.  There may be big differences in the terms offered by the various lenders you contact.

Some lenders may contact you suggesting that they are the only lender with authority to make IRRRLs.  Remember – Any lender may make you an IRRRL.

Some lenders may say that VA requires certain closing costs to be charged and included in the loan.  Remember – The only cost required by VA is a funding fee of one-half of one percent of the loan amount which may be paid in cash or included in the loan.

The occupancy requirement for an IRRRL is different from other VA loans.  When you originally got your VA loan, you certified that you occupied or intended to occupy the home.  For an IRRRL you need only certify that you previously occupied it.”

If you are veteran, now is a great time to see if the VA Streamline program can help you lower your monthly payments.

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The VA IRRL Streamline Refinance Program: No Appraisal Required

December 5, 2008 5 Comments

When interest rates dip, refinancing activity goes up — and recently we have had a few calls from Veterans who are currently in a VA loan asking about their refinancing options.

If you are currently in a VA loan and you are interested in just lowering your monthly payment, the VA IRRL streamline makes it easier than ever to take advantage of lower interest rates and lower your payment.

The VA streamline program doesn’t require an appraisal and you don’t have to fully qualify for a new loan – much like the FHA streamline program, it is designed to allow VA borrowers to get into a new, lower interest rate without going through a full loan qualification.

The three main criteria for a VA streamline are:

  1. The new VA loan must be a lower interest rate than the current loan
  2. The new principal/interest payment must be lower than the current loan
  3. The last 12 mortgage payments must have been made on time

With a VA streamline:

  • No appraisal is required
  • No income documentation is needed
  • No asset documentation is needed

When qualifying for a VA streamline, the only documents you will need when submitting your file to underwriting are a completed loan application (without the income or asset information), a copy of your DD-214, your current mortgage note and a copy of your current mortgage statement.

The VA streamline program takes about the same amount of time as a regular, full-documentation refinance due to the processing and underwriting times, but it is much easier to qualify for (providing that you meet the 3 criteria) and much less of a hassle to gather the documentation required.

If you are currently in a VA loan and your interest rate is above 6%, it is a good time to see if the VA streamline program can help you lower your mortgage payments and put you in an overall better financial situation.

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