Arizona VA Home refinancing options

Kevin Pearia, mortgage commentator for Veterans United Home Loans, the nation’s leading provider of VA home loans. is the author of this guest post.

VA Home financingFor many, refinancing a home generally means a lower rate and a smaller payment, leading to more financial freedom. However, every person’s situation is different, leaving a large decision and many options.

Moreover, this is no different for VA refinancing, so for you Arizona veterans, keep these in mind when weighing your options:

VA Mortgage Refinance With a Current VA Loan

If it’s a VA Loan that you are looking to refinance, the VA refinancing process offers multiple options to cater to your needs, including Interest Rate Reduction Refinancing (IRRRL) and cash-out refinancing.

The IRRRL, or VA Streamline refinance, is a quick and easy process with little to no out of pocket cost, and any closing costs can be rolled into the refinance.

Because you’ve already gone through the VA mortgage process, there is generally no need for a re-appraisal, no need to get another Certificate of Eligibility and few to no extra fees.

The only catch with the streamline is, you are not able to receive any cash back and it is only eligible for those who already have a VA loan.

However, veterans looking to refinance a conventional loan, who plan to use the equity as cash, have another option, the cash-out refinance.

Refinancing a Conventional Loan into a VA Loan

Don’t let the name fool you, the VA’s cash-out refinance doesn’t require you to take any equity out of your home, it only provides the option and makes it so veterans who have a conventional loan can take full advantage of their benefits with the VA loan.

A Cash-Out refinance can provide you with up to 90 percent of the equity in your home, and gives veterans the ability to refinance up to 100 percent of a homes appraised value.

However, take note, a Cash-Out isn’t quite as simple as a Streamline refinance, since you’re making the switch. When changing to a VA refinance, you’ll have to go through the same steps as obtaining a VA Loan, including providing a Certificate of Eligibility, proving you met service requirements; meeting credit score requirements, generally a minimum of 620; meeting debt-to-income ratio requirements, a maximum of 41 percent; and also receiving the required VA home appraisal.

Which is why it’s important to consider this next point.

When to (and not to) Refinance

A Cash-Out refinance, for example, is nice because you can, as the name suggests, take cash out. Now, you wouldn’t want to refinance just to have loose cash. This option is best only best to use when there is an emergency or for home renovations, not when you want a flat screen TV or motorcycle. Knowing when to refinance is key.

Everyone has their own views on what to cover with their equity, but the most common tend to include:

  • Pay off debt
  • Finish off that basement you’ve had on hold for the last few years
  • Cover some emergency, out-of-pocket expenses you simply didn’t expect
  • Pay for school

So is it Right for You?

Well, you could take a look at those bullets and say, “Yeah, I want to redo my kitchen.” But remember, Cash-Out or not, refinancing usually occurs for a few reasons. Those mentioned above are some of the options; however, to consolidate your loans and/or take advantage of a better interest rates are a two other.

If refinancing wouldn’t help you lower your payment, free up needed cash or consolidate loans with varying interest rates, then you might want to think hard about why exactly you’re consider refinancing.

About Amy Jones Group

Amy Jones is the owner of Amy Jones Group Keller Williams Integrity First. The Amy Jones group has been recognized as the #1 Real Estate Team in Chandler by the Phoenix Business Journal and voted Best of Our Valley for 4 years.

The Amy Jones Group specializes in real estate in Chandler, Sun Lakes, Gilbert, Mesa, Tempe, Ahwatukee, and Phoenix.