What do You Need to Know Before Refinancing Your VA Loan? Your new interest rate should be at least 1 percentage point lower than your existing rate.
Offers current mortgage holders
Good Finance Investment Loan (GFIL) offers current mortgage holders a great opportunity to take advantage of low-interest rates. But before calling your lender, there are a few things you need to know.
New interest rate must be lower than your existing interest rate
The new interest rate must be lower than your existing interest rate. To become valuable, your new interest rate should be at least 1 percentage point lower than your existing rate.
- Conditions. In addition to lowering your interest rate, you may be able to change your loan term. For example, you may want to move from 30 years of credit to 15 years of credit. While this will save you a lot of interest over the life of the loan, the downside is that your monthly payment will be much higher than it was.
- Under GFIC, you cannot receive cash from refinancing. This means that if your existing mortgage is USD 90,000, you will not be able to borrow an additional USD 20,000 over the equity of your home for a remodeling project. There is, however, one small exception: you can add up to USD 6,000 for energy efficiency improvements.
- Certificate of Eligibility. You do not need to reapply for RES. The landlord will be able to obtain a receipt from the VA electronically.
- Credit assessments and controls. VA does not require credit assessment or verification. However, your lender may need one or both of these documents.
- If your current mortgage is an FHA or a conventional loan (in other words, it is not a VA loan), you will not be able to refinance through the GFIC program.
- Second mortgages. You cannot combine an existing mortgage with another mortgage under the GFIC program.
- Fees. You do not have to pay fees. All refinancing loans (fees, etc.) can be loaned.
- Contrary to popular belief, you do not need to refinance with the lender holding your existing mortgage. Any loan can provide you with a GFIC. However, it is always a good idea to check with your current lender. If you take your loan elsewhere, your current lender will lose all the gains they have made on your loan. They may be inclined to give you a better deal to keep your business.
- Shop around. We recommend checking with at least three lenders before you begin GFIC. Fees, conditions, and costs can vary greatly.
- Be careful. Unfortunately, some unscrupulous lenders prey on veterans. According to the VA, “Some lenders may say that the VA requires certain closing costs that will be charged and included in the loan. The only cost required by the VA is a financing fee of half of one percent of the loan amount that can be paid in cash or included in the loan. “
Lower their mortgage payments
Refinancing is not the best solution for everyone. However, for homeowners looking to lower their mortgage payments, especially if their current interest rate is at least 1 percentage point above the rate, it may be an option worth considering.