Conventional or FHA to VA Refinance - Save Money!

A conventional or FHA refinance into a VA loan has many advantages. With VA rates at an all time low, you can save tens of thousands of dollars in interest payments over the life of your loan. In addition, you will be able to eliminate your mortgage insurance premium that you are required to pay on Conventional and FHA mortgages. These advantages, along with the less stringent credit requirements on a VA refinance, make this program a true benefit to your bottom line monthly.

Great Interest Rates

Interest rates are currently lower than most of us have seen in our lifetime. Although rates fluctuate daily, there has never been a better time to lock in a rate below 5% currently. Interest rates are determined by many factors including the bond market, the Federal Reserve and their manipulation of short term rates, the overall state of the economy, and consumer spending trends which include inventory of homes on the market and new construction housing starts just to name a few. As we see our economy recover, interest rates will rise and you could potentially miss out on an opportunity to save an incredible amount of money over the term of your current loan. Please (click here) to have a VA Loan Specialist contact you so you can start saving money now.

No Mortgage Insurance Premiums

Another advantage of refinancing your conventional or FHA loan into the VA loan is that you will not continue to pay a Mortgage Insurance Premium that you are currently required to pay on other financing options. This insurance premium, although tax deductible, does not go towards building equity in your property but rather goes to your current lender to insure that they will not lose money if you default on you mortgage. Lenders will often require mortgage insurance for mortgage loans that exceed 80% (typical cut off except for FHA) of the property’s sale price or appraised value. Private mortgage insurance is typically required when down payments are below 20%. Rates can range from 1.5% to 6% of the principle of the loan per year based upon loan factors such as the percent of the loan insured, loan-to-value (LTV), fixed or variable, and your credit score. The rates may be paid in a lump sum, annually, monthly, or in some combination of the two (split premiums). In the US, payments made by the borrower are tax deductible until 2011. On FHA financing, you must pay an Up Front Mortgage Insurance Premium (UFMIP) equal to 1.0% of the loan amount at closing along with a .9% of your monthly payment. This premium is normally financed by your current lender and paid to the Federal Housing Administration on your behalf. The Veterans Administration does not charge a mortgage insurance premium, but rather a funding fee that is spread out over the full term of your VA loan. The funding fee is 2.15% of the loan amount for the 1st use of the benefit and 3.3% for every subsequent use. This equates to only a few dollars a month as opposed to conventional and FHA financing where the MIP can be a substantial figure paid monthly. In addition, for any veterans that are receiving VA Disability Benefits of 10% or greater, the VA will waive the funding fee altogether.

Less Credit Restrictions on VA Loans

In recent years the credit restrictions required by lenders has gotten more and more stringent. For FHA loans most lenders now require a minimum FICO credit score of 640 to obtain a loan. On conventional financing the minimum score required is even higher for most programs and is contingent on loan-to-value, property designation, and other factors. Lenders have increased the minimum score for VA loans, however they are lower than those required for FHA and conventional loans. The minimum credit score to obtain a VA loan is currently 620. Although 20 points may not seem like a lot, it can be the difference is saving you thousands of dollars in interest payments when you are able to utilize the VA Refinance Loan Benefit. Along with a 620, you are also required to have no mortgage late payments in the most recent 12 months. 

Little to Nothing Out-of-Pocket

Although there are some closing costs associated with the VA Refinance, they are minimal compared to FHA and Conventional Loans. This is because the Veterans Administration has limited the fees that a veteran can pay. These are called VA Non-Allowable Closing Costs and are paid or credited by us (the lender). The only out-of-pocket expense that you will incur is the cost of the VA appraisal which we will obtain by a licensed VA Appraiser on your behalf. All other costs of the refinance are absorbed by the equity in your home so there is no money out of pocket at closing. In addition, it is possible to skip 2 mortgage payments. One, being the month you close, and Two, the following month after you close. Although it is common to skip 2 payments, it may not always be possible. Along with skipping a payment or two, you will also receive the current balance of your tax and insurance escrow account from your current lender. This can either be applied to your principle, or used for whatever you like. Our team will discuss the best and most practical options for you in regards to refinancing your current mortgage

Get Started Now!

As you can see, there are a number of advantages to utilizing your VA Loan Benefit to refinance your home and start saving money. With the current state of our economy, rates are at an all time low and there has never been a better time to keep your money in the bank. Refinancing your conventional or FHA loan into a VA loan is the best and lowest cost option available in today’s market. Our dedicated team of VA Loan Specialists will guide you through all of the options available to you and assist you in making the wisest decision and maximizing your monthly savings. Feel free to call us or vamohttp://vamortgageconnection.com/landingpage to get started.