How to refinance a VA loan
Answers to your VA refinancing questions
Refinancing a Department of Veterans Affairs (VA) loan requires applying for a new mortgage. You replace your current VA home loan with a new loan that has better rates or better terms. Refinancing can lower your interest rate and monthly payments. It can have other benefits too! Be aware, however, that by refinancing, the total finance charges may be higher over the life of the loan.
Many homeowners choose a VA IRRRL (which is also known as a “streamline” refinance) to refinance their current VA loan with a new VA loan. IRRRLs are popular with VA homeowners because they are easier and faster to complete compared to other kinds of mortgage refinances. If you are a current Freedom Mortgage customer, you can keep your remaining term when you refinance with us.
To get your refinance approved, you will need to complete an application, meet your lender’s financial requirements, and pay closing costs. Here are answers to questions homeowners often ask about refinancing a VA loan.
What is a "net tangible benefit"?
The VA wants to make sure that refinancing makes financial sense for you after you pay the fees and closing costs. They call this getting a "net tangible benefit." Significantly reducing your interest rate is one way to meet this standard. You will need a net tangible benefit to qualify for IRRRL refinancing.
How soon can you refinance a VA loan?
You must wait until the date that is the later of (1) the date in which you have made 6 consecutive monthly payments on the loan being refinanced and (2) the date that is 210 days after the first payment due date on the loan being refinanced. This is sometimes called "seasoning."
How much are closing costs for a VA refinance?
The closing costs for streamline refinances can average between 1% and 3% of the loan amount according to the Mortgage Reports website. Closing costs vary because some lenders may charge you lender fees or discount points. Most VA homeowners will need to pay a VA funding fee when they refinance, which is currently set at 0.5% of the loan amount for IRRRL refinances. Some borrowers may be able to finance the funding fee into the loan amount.
How long does it take to refinance a VA loan?
When you want an IRRRL refinance, you can often close your new VA loan in 30 days. Many Freedom Mortgage customers can close in less than 30 days with the streamline process because the application is shorter, you need to provide fewer income and financial documents, and a home appraisal is usually not required. Other types of refinancing often take more than 30 days.
How many times can you refinance with VA loans?
There is no limit on the number times you can refinance your home with VA loans. You will need to meet the same standards each time you refinance, including having your current loan for at least six months and receiving a net tangible benefit from the refinance. Each time you refinance, you replace your current VA loan with a new VA loan.
Can you get cash from your home equity when you refinance?
You can’t get cash from your home equity when you use the streamline program to refinance your VA loan. You will need to apply for a cash out refinance instead.
Freedom Mortgage is a top VA lender in the United States according to Inside Mortgage Finance, Jan-Jun 2023.
Last reviewed and updated October 2023 by Freedom Mortgage Corporation.