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Reminder on Getting Good VA Loans

Refinancing Your VA Loan

A lot of things can be done with your VA loans. Certainly, this benefit granted by the federal government to the military servicemen is of enormous use not only to them but even to their family. They can use it to purchase a beautiful new home they have been longing to have, or pay for the tuition of children, or even buy a brand new car. It can also be used to pay old debts. This is called VA refinance.

Refinance simply means the substitution of an old existing debt with another loan with the terms of payment being modified or changed. The borrower may refinance his loan wit the same lender or may loan from another lender. This practice is most commonly done by people with home mortgages.

The same process is also practiced with VA refinance. A war veteran or a military retiree can apply for VA loans and do the VA refinance. However, with VA refinance, the process is bit easier as it is federally guaranteed by the Department of Veterans Affairs. The government insures the loan for the eligible veteran.

There are several types of VA refinance. One of these is the streamline refinance program. This method is the most popularly-used type of VA refinance program. It is precisely because the borrower does not need to take out cash for the streamline refinance method. The existing loan will be simply stretched out for a longer term or, if the interests are at variable rates, will be converted into a fixed-rate term.

Another method is the cash-out program. This type of VA refinance program involves the payment of the existing mortgage with a new larger amount of loan. The borrower can keep the money left from the payment of the old debts. He/she can use this for other purposes he/she may want such as for improvement of the home, or purchase of furniture.

VA refinance could be advantageous for the veteran. The borrower can use it to consolidate all his/her existing debt obligations and mortgages. The interest rate may also be lowered by adjusting the terms of the payment. Through VA refinance, the loan may be extended to a longer period or the variable rates, which are dependent on current exchanges, will be converted into a fixed rate term.

However, there may also be some disadvantages of VA refinance. Foremost among these are the fees to be paid from the start up the end of the term of the refinance program. These may not serve the purpose of saving if the loan is refinanced. A larger total interest rate than the previous term may also result with the prolonging of the term of payment of loan.

It is imperative therefore that before you enter into a VA refinance program, you must weigh the advantages of this method. The best way to ascertain the benefit of the refinance program is to calculate all the costs, from the upfront fees and to the ongoing interest rates and all the possible costs that may rise during the entire term of the refinanced loan. Whichever way is best, then you must go for it.

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Richard A. Curtis is author of article written on Military Home Buyers & Military mortgages. For more information, please visit :www.va-loan.com

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