Qualifications for a VA Refinance Mortgage

Qualifications for a VA Refinance Mortgage

The U.S. Department of Veterans Affairs (VA) allows a service member to refinance an existing VA mortgage to acquire a new mortgage with better terms or more affordable payments. A borrower with an existing VA loan doesn’t need to use extra diligence, or even the VA guarantee allowance for loans for support associates, to qualify for a refinanced VA mortgage, as stated by the VA.. On the other hand, the borrower must meet the minimum qualifications determined by the VA to refinance the present mortgage.

Acceptable Current Mortgage Status

You cannot have more than a late mortgage payment over the past 12 months prior to the loan application to qualify for an interest-rate reduction VA refinance. If you do have one late mortgage payment, then the payment must have been obtained in 30 days of the year, as stated by the U.S. Department of Veterans Affairs. The mortgage you are refinancing has to be present, or paid to date, at the time of the VA refinance application. In the event the loan is delayed, you have to receive approval from the VA to refinance. To get”cash-out” refinancing, which means that you are getting money from the proceeds of the new mortgage after the original loan is paid, the loan you are refinancing can be in delinquent status at the time of the refinance application.

Lower Principal and Interest

The refinanced VA mortgage, even when calculated from the lending company, must get a lower principal balance and interest payment than the original loan, unless the refinanced mortgage is for a shorter term. The lower interest and chief qualification applies to both kinds of VA refinancing. However, if you are refinancing an adjustable-rate mortgage are including money to pay home energy-efficient improvement expenses, the VA may subtract the lower interest and principal requirement.

Ability to Pay

You have to prove you can make the payments in case your projected monthly payment under the refinance is 20 percent more than your current payment, even as stated by the U.S. Department of Veterans Affairs. The lending institution will ask documentation of your expenses and income in situations where the payment rises by 20 percent or more below the cash-out or interest-reduction refinance. The VA requires a certification from the lender qualifying your ability to pay the new monthly payment amount.

Acceptable Income and Appraisal for Cash-Out Refinancing

Interest-rate reduction refinances do not require income documentation or appraisals, as stated by the VA.. A cash-out refinance requires acceptable income documentation and a passing home appraisal, or appraisal of your home’s market value, by a certified practitioner.

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