Current VA refi rates
Current VA refi rates
VA Refinance Rates: What You Need to Know
Are you considering refinancing your VA mortgage? Before you make any decisions, it’s important to understand the current VA refinance rates and how they compare to other types of refinances. In this article, we’ll provide you with all the information you need to make an informed decision.
VA Refinance Rates Today
VA mortgages are known for offering some of the lowest rates available. This is because VA loans are insured by the government, making them lower risk for lenders. According to Jennifer Beeston, Senior Vice President of Mortgage Lending at Guaranteed Rate, “VA rates are lower than conventional rates.”
However, it’s important to note that rates overall have spiked in the first half of July. Although they have trended back down a bit, average VA refinance rates are still elevated compared to recent months. In July, VA refinance rates were an average of 6.23%, about 20 basis points higher than the previous month.
Types of VA Refinance
When it comes to refinancing your VA mortgage, you have two options:
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Interest Rate Reduction Refinance Loan (IRRRL): Also known as a VA streamline refinance, IRRRLs offer a faster and more affordable process to refinance from a VA mortgage into a new VA mortgage. This option is ideal for borrowers who want to lower their monthly payment or rate or refinance an adjustable-rate loan into a fixed-rate loan.
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Cash-out Refinance: This type of refinance allows you to take your home’s equity and turn it into cash. It is a good option for homeowners who want to refinance a different type of mortgage into a VA mortgage.
Before deciding which type of VA refinance is right for you, it’s important to assess your financial goals and needs.
How to Get a Good VA Refinance Rate
According to Beeston, the biggest impact on your VA loan rate is the lender you choose to work with. It’s crucial to shop around and get preapproved with multiple mortgage lenders. This will help you compare offers and ensure you’re getting the best deal in terms of both the rate and other loan costs.
While shopping for lenders, be cautious of those that avoid talking about rates. Beeston warns, “An old lender trick is to have the client focus on payment so they can’t shop you on rate.” To avoid being misled, make sure you discuss the current and expected mortgage rates with potential lenders. Furthermore, it’s essential to have the option to lock in your interest rate while you continue to shop around.
In addition to the lender you choose, your credit profile can also play a role in the rate you’re offered. VA cash-out refinances require full underwriting, meaning your credit and finances will be assessed before approving you for the loan. If you have a great credit score, you may be eligible for a lower rate. On the other hand, IRRRLs typically don’t require a credit check.
Benefits of VA Refinance
VA mortgages offer numerous benefits for homeowners, making them an attractive option for refinancing. Here are some of the key advantages:
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Affordability: VA mortgages have low rates and limited extra costs. Similar to VA purchase mortgages, VA refinances don’t require mortgage insurance, even with a down payment of less than 20%.
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Streamlined Process: If you opt for an IRRRL, you may not have to go through the underwriting process or pay for an appraisal. The Department of Veterans Affairs doesn’t require credit checks, underwriting, or appraisals for IRRRLs, although some lenders may still impose these requirements.
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Access to Cash: VA cash-out refinances offer one of the best cash-out programs available. You can cash out up to 100% of your home’s value, although some lenders may limit the loan-to-value ratio to 90%.
VA Refinance Costs
It’s important to consider the costs associated with VA refinancing. You will need to pay a funding fee, which varies depending on the type of refinance. For IRRRLs, this fee is equal to 0.5% of the loan amount. On a cash-out refinance, the fee is 2.3% for the first refinance and 3.6% for subsequent refinances. The funding fee can be paid at closing or financed into your loan.
In addition to the funding fee, there may be other closing costs incurred during the origination process. These costs can be rolled into the loan for IRRRLs, whereas cash-out refinance borrowers will need to pay these costs at closing and can utilize the loan proceeds to cover them.
Conclusion
If you are considering refinancing your VA mortgage, it’s essential to be aware of the current VA refinance rates and understand the different options available. By shopping around and comparing offers from multiple lenders, you can ensure you are getting the best possible deal. Additionally, taking advantage of the benefits offered by VA refinancing can provide you with an affordable and streamlined process. Before making any decisions, carefully assess your financial situation and consult with mortgage professionals to determine the best course of action.
Use our free mortgage calculator to estimate your monthly mortgage payment and see how different rates could impact your finances. Feel free to explore the frequently asked questions section at the end of this article for more information on VA mortgage refinancing.
