Refinancing a va home loan

Updated: Apr 6

Are you thinking about refinancing your VA Home Loan? I’m sharing all the details of the experience my husband and I had, so you know what to expect. Don’t be scared to refinance a VA Home Loan! With the right mortgage company, walking through the process is a breeze.

I’ll start by saying I really hate doing business over the phone. I’m the paper and pencil type for sure. I want to draw everything out, and then ask the same five questions until I feel like I know exactly what is going on. Needless to say, I would have liked to have embarked on this journey in the branch, but unfortunately, COVID prevented that!

Mortgage terms to know

I’ll start with a few terms that I feel like are pretty important. I want to make this article as easy to read as possible, so you know what to expect when refinancing a VA home loan.

  • Mortgage Lender- The company / bank that is loaning you the money.

  • Mortgage Processor- The individual(s) that help you through the process of refinancing your loan. They will be contacting you regularly for you to fill out paperwork.

The benefits of refinancing

I think the best reason to refinance your VA home loan is to save money on your monthly payment! The whole goal of refinancing is to secure a lower interest rate. Why would you continue to pay a home loan with a 4% interest rate if you could pay a 2% interest rate? That doesn’t make any sense at all!

With that being said, you need to do some calculating before you commit to refinancing. You want to make sure that the change in your interest rate is worth the money you will spend to refinance. Check around with a few banks to see who can offer you the best rate. In our experience as a military family, Navy Federal has given us the best bang for our buck. I’m all about saving money as a military family.

making the choice to refinance a VA Home Loan

Before you sign your life away a second time to refinance your VA Home loan, make sure that you write everything out for yourself. Do you know what costs are involved? Do you have any idea what your new payment will be? Who are you going to use to refinance your loan?

Can you refinance a va home loan?

This information is so individual, so I hesitate to include it. There are a few factors that can contribute to whether or not you’ll be qualified to refinance your home. I absolutely recommend talking to whoever you intend to refinance the Va home loan with to see if your individual needs can be met. Typically speaking, there are a couple things that would increase your chances of securing a lower rate. Your credit score, home equity, and debt to income ratio are all big factors.

Who should you refinance with?

Check with your current lender to see what rates they’re offering. You’re already familiar with your current financial institution, so you may want to continue doing business with them. There are a few questions to cover with your possible lender. What rate would they offer you? If the market rates go lower, are you locked in? Or would your rate lower?

What would your mortgage payment be?

If you need to figure out what your new payment would be compared to your current payment, then I recommend using this advanced mortgage calculator. You’re basically filling in the blanks and pressing go. They take care of everything else for you. I think it is a huge bonus that they even thought to include things like HOA payments.

Your mortgage payment lowering is a huge factor for most people. One thing to consider is how long it will take you to pay off the costs you incur when you refinance. How long will it take you to pay off the fees and closing costs in order to see the lower payment?

A few things to know about home mortgages

  • Mortgage lenders prefer to refinance mortgages that are more than two years old.

  • Refinancing your VA Home Loan requires a credit check.

  • You may have to pay a downpayment to refinance.

  • The lender will need to speak with all parties listed on the mortgage.

  • There are about a million papers that need your signature. A lot of the papers that we signed digitally, we signed again for the closing.

  • Veterans Lending Group has a number of free resources to help you go into refinancing feeling like you know exactly what is available to you. They have a free Home Loan Bootcamp that will help you prepare to refinance to buy a home to begin with.

Our personal experience

We decided to refinance our VA Home Loan with Navy Federal. Navy Federal was our initial lender, and we felt like the rates they were offering were competitive. This is our first time using the VA Home Loan, so your experience may be different!

Checking the market

First, we explored the market rates. I did most of it online because I’m not a fan of making phone calls. I find it hard to understand and get the answers to everything I’m asking if I’m not actually reading the information. Yeah, COVID made this sort of tough for me. Thankfully, the Navy Federal chat feature was super helpful. Combining that with all of my individual research, I felt confident that I knew what we were getting into.

Signing your life away

We made our initial agreement over the phone with Navy Federal which was simply us telling them that we did in fact want to refinance our home loan. They informed us that we would need to pay to have our credit run, possibly for our home to be appraised, and the closing fees. We were given the option to roll any fees into our mortgage.

A few days after our verbal agreement, we were contacted by a mortgage processor that worked for Navy Federal. I sent emails back and forth with the processor on a weekly basis, and she always let me know if there were documents uploaded that we needed to sign. Some documents were simply digital, but we were also sent a small book of papers that needed to be signed and scanned into the online portal.

Sealing the deal

It took a long time for us to be approved to refinance simply because the rates are at a record low, and tons of people are trying to refinance. We started the process in August and finished in December. We actually signed our closing papers the day before Christmas Eve! Typically, closing papers are signed at a lawyers office, but we were able to sign ours in our home. (Navy Federal told us which lawyer they recommended and when we agreed to use them, the lawyers contacted us when we were approved for closing)

I really hope this information helps you. While the market is great, consider refinancing your VA home loan. Save yourself some money and get the rates that reflect the current bounce in the market.

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