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VA refinance options

Which refinance you can use comes down to one thing: whether your current mortgage is already a VA loan.

Written by Sean Goudreau, Mortgage Loan Officer · NMLS #326155 · Rate

Which refinance applies to you?

Start with your current mortgage, because that single fact usually decides it.

If you already have a VA loan and you want a lower rate, the streamline refinance is almost always the answer. It skips the appraisal and the income review in most cases, and the funding fee is 0.5%.

If your current loan is conventional or FHA, the streamline is not available to you at all. The cash-out refinance is the route into a VA loan, and it works even if you take no cash out.

If you have a VA loan and you want equity out of the house, that is also the cash-out. The streamline does not allow it.

The cost difference between the two is substantial. A streamline charges 0.5% and a cash-out charges 2.15% or 3.3%. On a $300,000 loan that is $1,500 against $6,450 or more.

What both refinances have in common

The funding fee applies to both, at different rates, and the same exemptions apply to each. A VA disability rating of 10% or higher, a Purple Heart on active duty, or an eligible surviving spouse means no fee at all.

Closing costs can be financed into either loan rather than paid at closing, which is how most VA refinances are done.

Both require that you have used or are eligible for the VA benefit, and both are subject to the VA's net tangible benefit rules, which exist to stop refinances that help the lender more than the borrower.

And both come down to the same arithmetic. Total cost divided by monthly savings gives you the number of months before the refinance pays for itself. If you are staying in the house longer than that, it works.

Not sure which one you need?

Tell me what loan you have now and what you are trying to do. That is usually enough to know which refinance applies and whether it is worth it. No credit pull, no application.

No credit pull or application. Sean will reach out personally.

Sean Goudreau

Mortgage Loan Officer

NMLS #326155

Rate

465 Waverley Oaks Rd Ste 200

Waltham, MA 02452

Company

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