If you have already used your VA loan, you may still benefit from working with a lender to get better terms. Called “refinancing,” this process is similar to the home buying process but does not include the home search or contract negotiations.
You already own the home but are just seeking better financing. This may be the result of the market rates lowering, your personal financial situation improving, or the value of your home going up.
There are two main ways to refinance your VA loan.
Streamlined Refinance (IRRRL)
Also known as the Interest Rate Reduction Refinance Loan, or IRRRL, the Streamlined Refinance loan is easy to complete and often requires no money from the homeowner. This type of refinance simply adjusts the terms of financing and is great when interest rates have lowered since you purchased your home.
Cash-Out Refinance
A Cash-Out Refinance is exactly what it sounds like—you refinance to pull cash out of your home once you have paid down the loan and have equity. This can be a great option if you want cash to pay off other debts, pay for a large purchase, or do home improvements.
You can apply for a cash-out refinance for a VA loan, USDA loan, FHA loan, or conventional loan. The only limitations are placed by the lender on how much cash you can pull out and how much equity they require to remain in the property.
Keep in mind that refinancing may mean more interest costs over the life of the loan, so talk to your lender about all of your options before deciding on a refinance. If you are early into homeownership and interest rates have gone down, refinancing can be a great way to lower your monthly payments and even save money over the long-term
