Loan Types

• VA does not require the veteran currently have a VA mortgage when refinancing into a VA mortgage. The veteran may have a conventional mortgage, FHA mortgage, private mortgage, subprime mortgage or a VA mortgage and still qualify for the VA refinance programs. VA allows lenders to offer fixed rate and adjustable rate mortgages under the VA home loan program. Veterans may only finance owner-occupied homes. VA does not finance a vacation or investment properties.
  
  

Rate and Term Refinance

• A rate and term refinance is a loan that allows the borrower to change their interest rate or mortgage terms. This type of loan usually lowers the interest rate and payment amount on a mortgage. Veterans may use their VA benefit when refinancing to change their loan type or amortization term as well. Many veterans choose 30-year fixed-rate mortgages, which provide relatively low interest rates and affordable payments due to their long amortization term. Veterans who hold a VA mortgage loan may refinance into the Interest Rate Reduction Refinance Loan (IRRRL) without proof of income or requiring an appraisal if the new mortgage amount does not exceed their current loan's initial balance.
  
  

Cash-Out Refinance

• VA allows veterans to access the equity in their home through the VA cash-out refinance loan program. Cash-out refinances provide veterans with extra cash needed for a multitude of different expenses. The loan may be used for home improvements, to pay off other debts, finance a business or just about any other reason the veteran chooses.
  
  

Making Home Affordable Modification

• With the housing collapse and the recession which began in the mid- to late 2000s, many veterans found their home loan payments no longer affordable. This often resulted from unemployment, underemployment or other reasons, which caused their income to decline. Beginning Feb. 1, 2010, the VA Home Affordable Modification Program (HAMP) authorizes lenders to permanently modify the VA home mortgage. The modified payment cannot exceed 31 percent of the borrower's gross monthly income, and the veteran must successfully complete a trial period prior to making the modification permanent. Once the veteran successfully completes the trial period, the loan permanently modifies to the new terms and cannot be changed unless refinanced.