VA Refinance vs. Conventional Refinance Loan
April 29th, 2008 | Published in VA Loan Programs | 3 Comments
What are the benefits to you with a conventional to VA refinance loan? As a veteran, you are entitled to receive benefits from the government in many ways. One of those ways is to get a bit of a backing for your home loan. What this means is that the government helps to secure your loan, so when you apply for a home loan, that extra bit of reassurance helps lenders to know that you are a good credit risk to them. The less risk you are, the less you may pay for a loan in terms of interest rates.
If you currently do not have a VA loan but you are a veteran, you can likely save money by switching your loan to a VA loan. As mentioned, a VA home loan may have a lower interest rate. This translates into paying less for your home with less insurance and paying less each month. If you have a conventional loan, which is a term used for a standard, non government backed loan, you may qualify for a VA loan. The process of switching is simple. This type of loan is called a conventional to VA refinance loan.
What Are The Benefits Then?
As a home owner, you likely want to save money on your loan in any way that you can. While you will have to pay back the money you borrowed when obtaining your home, the amount of interest you pay is based on the interest rate charged to you by the bank. Each bank offers a different rate of interest. Because you are a veteran, you qualify for one of the lowest interest rates available. A conventional to VA refinance loan will help you to take advantage of this savings.
Here are some of the benefits of a conventional to VA refinance loan.
· Refinance your current loan to obtain the low VA refinance rates available.
· You do not need any money down to get this type of loan. The loan can be as large as $350,000.
· You do not need to pay private mortgage insurance as you would with a conventional loan (a monthly fee that helps to guarantee your loan is paid to the lender.)
· Reduce your monthly payment to a level that is more affordable.
· Refinance to a fixed rate loan that has interest rates that do not change from year to year as a conventional adjustable rate loan would.
If you are considering a conventional to VA refinance loan, you currently have a conventional loan but you are a veteran. Determine if you qualify for this type of loan program. Most veterans do. Then, compare the numbers of the refinance options that you have including conventional loans. You are likely to find that a VA loan offers a lower interest rate and therefore a lower monthly payment for your home.
Any veteran that does not have this type of VA loan should consider refinancing. Knocking just a couple of fractions off a percentage point from your current loan will help you to save thousands of dollars in the long run on the price you pay for your home. What’s more, a conventional to VA refinance loan is a simple process only taking a few minutes to get started. The outcome is money savings, though.
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November 10th, 2008 at 8:42 pm (#)
Hi!
Very interesting article!
Always glad to read your site!
Subscribed to your RSS feed!
Many thanks for your work!
January 24th, 2009 at 9:01 pm (#)
Very informative article! Thanks for helping to build awareness about the VA refinance program. At first glance, many probably wonder why they should bother refinancing, but the benefits are clearly numerous.
August 26th, 2009 at 5:25 pm (#)
Hi,
Unfortunately most loan companies are ignoring the new public law signed into effect in October 2008 that states:
3. ENHANCEMENT OF REGULAR REFINANCING LOANS: Section 504 of Public Law 110-389 made changes to VA’s regular (“cash-out”) refinancing loans. Effective immediately, the maximum guaranty amount for regular refinancing loans is the same as the maximum guaranty amount for purchase loans. Regular refinancing loans are now available for up to 100 percent of the appraised value of a home, which is an increase from VA’s previous threshold of 90 percent. All other VA program requirements for regular refinancing loans remain the same.
I am in this situation right now. I’ve been working with a loan company for TWO months and they just now informed me they weren’t going to honor the new law. So, if you are over the 90% threshold, you better have the cash to make up the difference. So much for taking care of our veterans.