Even though home prices are up and home sales have increased over the last few years, the requirements to obtain a loan are more stringent than ever. Trying to get a home refinanced, unless you have stellar credit, in this environment is even more difficult to do in the current lending market. For qualifying veterans, the VA has options that can help you refinance your home at a lower interest rate, if possible, which can potentially net your great savings over the life of the loan. Since this is a VA home loan with bad credit, you may be eligible if you currently have a VA loan.
Can You Get a VA Home Loan with Bad Credit?
You should be able to qualify for a VA loan if you are current on your existing mortgage and refinancing must be to your benefit. No appraisal is required on your property, nor is verification of your VA eligibility. Your income and asset verification for a VA streamline is minimal and the entire process is faster to process than a conventional home refinance.
Are You Eligible for a VA Streamline Refinance Loan?
Also called an interest rate reduction refinance loan (IRRRL), as well as a VA to VA, refinance loan, a VA streamline loan provides current VA homeowners a way to lower their interest rate on their VA mortgage. If you have used the VA loan eligibility on your current residence and it is financed with a VA Loan, you are eligible. A VA Streamline must be a VA-to-VA exchange and will use your VA eligibility for the refinance loan.
- You will not need an appraisal. It’s not required for a VA Streamline loan.
- You may not need any out of pocket funds, as any costs of a VA Streamline loan can be rolled into the loan.
- Although lenders are not required to give you a loan, or the best rate, they do look favorably on VA loans because they are guaranteed by the U.S. Government. This is especially helpful if you are seeking a VA Loan with bad credit.
- If you are seeking to refinance a VA Arm, you may see an increase in the interest rate you are required to pay on your loan, when you change to a fixed rate loan.
- A VA Streamline loan does not offer cash back to the borrower from the loan proceeds.
Even if you have multi-family property and no longer live in it, you may be eligible for a VA Streamline loan. You won’t be required to certify that you live there, only that you have lived on the property that you wish to refinance.
Do You Know Where to Apply for a VA Refinance Loan?
A certificate of eligibility (COE) is not required for a VA Streamline loan. If you have yours readily available, though, it will help you get the process started with your lender so that they know that you are eligible. If you do not have it, your lender will be able to quickly verify your eligibility via e-mail with the Veteran’s Administration.
You are not required to use your current lender for a VA Streamline loan. You can shop around and find the lender that is going to give you the best rate and terms and that may not be your current lender. Don’t be sidelined by lenders who call and claim they are the only source for a VA refinance loan because it’s not so. Any lender can give you a VA Streamline loan.
They may also tell you the VA requires some of the fees that show up at closing. That’s not true either. The only cost to you required by the VA is a one-half of one percent funding feel of the loan amount. This fee can be paid in cash or rolled into the loan and is the only fee you are required to pay by the VA, so any other fees you see are being charged by the lender.
Since there are no appraisal, underwriting, or other miscellaneous lender fees that accompany a new loan, inflated costs mean someone is taking advantage of you. Inflated closing costs of a refinance can outweigh the benefits of refinancing to begin with, which is to lower interest and your monthly payment. So, before you sign anything, even if you seek a VA loan with bad credit, shop for a lender who will help you with your financial situation.
Is a VA Streamline the Right Loan for You?
Like any financial decision, you make, considering the long-term benefits of a loan can be confusing and it’s sometimes difficult to know if you are making the right decision. If you can refinance and reduce your interest rate by one percent or more, your monthly and long-term benefit of refinancing can be quite noticeable.
If you have a VA Arm that is about to mature, a VA streamline can help you get a 100 percent loan at a fixed rate and save you the cost of private mortgage insurance (PMI) and other costs of a conventional loan. Consider your options then make your move. You might find that a VA Streamline refinances loan is the right VA home loan with bad credit the best option that you have to refinance your home.
2 Point Highlight
Even though home prices are up and home sales have increased over the last few years, the requirements to obtain a loan are more stringent than ever.
Also called an interest rate reduction refinance loan (IRRRL), as well as a VA to VA, refinance loan, a VA streamline loan provides current VA homeowners a way to lower their interest rate on their VA mortgage.
