Sure there are lots of things you could do with a VA refinance. We have compiled our most popular reasons into a top ten list. Starting with number ten, sit back and see which of these options you may have interest in.
#10: Save to Sell.
- Many interested in a VA refinance look to a VA Hybrid. Similar to an adjustable rate mortgage, VA Hybrid's are excellent for those interested in selling their home in the next couple of years. There are 3 and 5 year VA Hybrids that offer very low interest rates. And if your plans change, you can rest assured that your interest rate can only change once a year after the initial 3 or 5 year mark, and that it cannot go higher than 5 points above your initial rate. So if you sign at 3.5%, it will never go over 8.5%. And typically, the rate does not change more than 1% a year. Taking advantage of a VA Hybrid can lower your monthly mortgage payment substantially, allowing you to save the extra for another use.
#9: Lower your Principal.
- Following the heels of #10, many people look at a VA Hybrid as a quick way to pay down their principal before selling. Instead of saving the monthly savings from the mortgage payment, a good number of people decide to apply the amount directly to principal. This allows for a higher equity when selling the home, which can sometimes mean more money out of your house sale.
#8: High Efficiency.
- A VA refinance can help make your home more energy efficient. When refinancing a VA loan, it is possible to include $6,000 for energy efficient improvements to the home.
#7: High Ticket Purchase.
- For some, a VA refinance frees up money to make a big ticket purchase. Using the VA Cash-Out refinance option, many people choose to purchase a newer vehicle or RV or even boat. For others, new furniture for the house might be just what they are wanting. And some have even gone so far as to help pay for college.
- dreams. Imagine being able to scoot away for a break without having to scrimp and save for months or even years! Frivolous? Perhaps. Deserving? Of course!
#6: 2nd Mortgage Erased.
- It is possible to pay off your second mortgage with a VA refinance. Simply refinance with a VA Cash-Out and use the money received to pay off the high interest second mortgage. This can save you hundreds each month while lowering your interest rate on your first mortgage. The money you save can go to other bills or into savings.
#5: Lower Your Interest Rate.
- By taking your interest rate and lowering it, even by half a percent, you could save hundreds each year. Typically we see interest rates being lowered by one or two percent on each VA refinance. For an average 30 year home loan of $150,000, dropping the interest from 5.5% to 4.5% gives a lifetime savings of $34,000! Just imagine! That is money you do not have to pay to the bank! And sometimes, we can even see lower interest rates available.
#4: Saving Money Each Month.
- Along with #5, a VA refinance can help you save money each month. By just lowering your interest rate, your monthly mortgage payment drops also. For the above example, the homeowners were able to save $100 each month. That money could either go into savings or be used to pay monthly bills. If times are tough, and a paycheck doesn't seem to go as far as it once did, this might be the option for you.
#3: Improve your Castle.
- A man's home is his castle, or her castle. And if your castle could stand some improvements, a VA refinance can help you out. Depending on the extent of your needs, you could choose a VA Streamline or a VA Cash-Out refinance. And, don't forget that you can add in additional dollars for energy efficient improvements.
#2: Banish Credit Card Debt.
- This is one of the most popular reasons. Understandably many of us have needed to use our credit cards to get by occasionally. The problem with credit cards is that they are so hard to pay off! With a VA refinance, you could locate the extra money you need to pay off the cards faster or even all together, saving you hundreds or possibly thousands, depending on the extent of your credit card debt.
#1: Pay Off your Home Sooner.
- For some, the reason for a VA refinance is not to save money on their mortgage payment, or to pay off high debt, or even to make improvements on their home. For them, a VA refinance can be used to change the term of their loan to allow them to pay off their home sooner. Some have a set retirement date in mind, or any other specific timeline that they want to follow and paying off their home falls in a set time. Changing their 30 year loan to one as short as 15 years will increase their payment somewhat, but will also have their home paid off while they are still young. Many want to build up equity as fast as possible and a VA refinance with a change of term is just the way to do that.
Looking into a VA refinance is a great way to accomplish any one of these reasons. You may even have one of your own. There are several types of VA refinances available, but two that may best suit your needs.
- This VA refinance is the fastest and easiest. Many lenders can offer this refinance with No Appraisal, No Credit Requirements, No Income Verification or Employment Verification. There is no cash-out of the loan, but many are able to defer up to 2 month's mortgage payments and/or receive a refund from their escrow account at closing. This can add up to a small but good amount of money that can be applied back to principal or for other needs.
- This VA refinance requires a Home Appraisal, Credit Requirements, Income Verification and Qualification. It is more time consuming due to the Cash-Out option. This VA refinance takes advantage of the equity you have built up in your home. Monthly mortgage payments may increase slightly, but that is balanced by the money saved by having high debt paid off.
So, if this sounds like something that you are interested in, it is important to contact a loan officer or lender soon. Interest rates are the lowest they have been in decades but are showing signs of increasing soon. Don't miss out on this rare opportunity to do a VA refinance and save a bundle!