VA Mortgage Loans: Purchase Mortgage, Refinance, Cash Out Refinance
A VA loan is meant to help veterans of the United States Military get easy access to home financing. You will of course need to consult a mortgage specialist in order to determine your eligibility, because guidelines do change often. However, you should be able to qualify for one if you meet one of the following conditions: You have served 90 consecutive days of active service during wartime; You have served 181 days of active service during peacetime; You have more than 6 years of service in the National Guard or Reserves; You are the spouse of a service member who has died in the line of duty or as a result of a service-related disability.
First of all, you may use your VA Mortgage Loan to purchase a home! This will, in some cases, allow a veteran to purchase a home with no money down, or 100% financing. This means that if your home appraises for $300,000, you may be able to secure a loan for the full amount. By comparison, if you were to purchase a home with a conventional mortgage loan, you generally would need at least 5% cash as a down payment in order to be approved. If you compare the VA loan to the FHA mortgage loan, you would still need at least a few percentage points worth of cash in order to get the loan.
Secondly, once you have a VA mortgage loan, you may refinance it in the case where you would like to change the rate, if you now qualify for something lower; you may change your rate type such as going from an adjustable to a fixed rate or from a fixed rate to an adjustable rate. You may change the term of the loan, such as refinancing from a 30 year mortgage to a 15 year in order to save money on interest; or you may refinance your 15 year mortgage to a 30 year loan in order to save money monthly. In these scenarios, you may also be able to do what is called an Interest Rate Reduction Refinance Loan (IRRRL) or sometimes called a streamline, which often lowers overall cost associated with a refinance, and is often much faster to process.
Another thing you can do with a VA Mortgage Loan is A Cash Out Refinance. This essentially allows you to use your VA Home Loan to withdraw from your home equity and use the cash for almost anything you want. A typical scenario would be for something like a home improvement such as a room addition, kitchen remodel, or the installation of solar panels. There is also the possibility to use it for Debt Consolidation of high interest credit cards or personal loans. You can usually get a much lower interest rate and payment on a mortgage loan when compared with credit cards and you can get rid of those double digit, revolving interest rates.
The costs of a VA Mortgage Loan will vary, but are usually better than that of a conventional or even FHA loan at the end of the day. There is typically a VA funding fee, that is associated with a VA loan, however you may be eligible to have the funding fee waived if you have a qualifying scenario, consult your loan specialist, or mortgage broker today to find out which option is best for you.