Do VA Loans Qualify for HARP?
The HARP program expired Dec. 31, 2018, but while HARP is gone, you’ve still got options. Many homes have increased in value considerably since HARP rolled out. That means many homeowners may currently be eligible for a standard conventional refinance.
It’s not just an increase in home values that is pushing homeowners to refinance. With interest rates at the lowest levels in years, homeowners are racing to refinance to take advantage of today’s low rates and make their monthly mortgage payments more affordable.
Veterans and active-duty servicemembers interested in refinancing should look into two VA-specific refinances: VA Streamline Refinance and the VA Cash-out Refinance.
What is a VA Streamline Refinance?
The VA streamline refinance loan — also known as Interest Rate Reduction Loans (IRRRL) — doesn’t have many of the hurdles required for other types of refinances, which means they’re often much easier, quicker, and inexpensive to get.
VA streamline refinance loans differ from other types of refinances in the following ways:
- No pay stubs or W2s required
- No bank statements required
- No home appraisal is required
- Underwater homes are eligible
- Required funding fee is lower than for VA purchase loans
- Closing costs can be wrapped into the new loan, meaning little to no out-of-pocket expense
Who is it good for?
A VA streamline is a good option for a homeowner who has a current VA loan (those who don’t aren’t eligible) and is looking for an easy, quick pathway to reduce their monthly mortgage payment, wants to refinance into a shorter-term loan, or switch to a fixed-rate mortgage from an adjustable-rate mortgage.
VA streamline refinance eligibility
To be eligible for a VA streamline refinance, you must currently have a VA home loan and meet certain minimum service requirements. Along with those requirements, you’ll need to meet the following criteria:
You must have made on-time payments over the past year, with no more than one payment that was 30+ days late in the past 12 months.
As of April 1, 2019, the closing date of the new VA streamline refinance loan must occur after both of the following events:
- It has been at least 210 days (about 7 months) since you made the first payment on your current VA loan.
- You have made at least 6 full payments on the VA home loan you’re looking to refinance.
Net tangible benefit
A VA streamline refinance must improve a Veteran’s financial situation — known as a net tangible benefit. Basically, the new monthly mortgage payments must be lower than the current payments.
There are a few exceptions however. If you are refinancing into a shorter term, from an adjustable-rate mortgage to a fixed-rate mortgage, or financing energy-efficient improvements, you may still be eligible for a VA streamline refinance, even if you’re monthly mortgage payments aren’t decreasing.
What is a VA cash-out refinance?
A VA cash-out refinance allows veterans to do one or both of the following:
- Open a loan that is larger than their current one, and receive the difference in cash
- Pay off a non-VA loan
Who is it good for?
Most applicants are veterans or active-duty servicemembers who want to get a large lump sum of cash for something like home improvements. But others have a non-VA loan — such as conventional or FHA — and refinancing to a new VA loan can be used to eliminate mortgage insurance.
VA cash-out refinance eligibility
The requirements for a VA cash-out refinance are similar to those required for a VA home purchase loan. To qualify, applicants must meet VA home loan eligibility requirements. From there, a licensed VA loan expert will guide you through the next steps of the process, determining whether your application meets additional VA cash-out refinance criteria. The mortgage professional will help you determine:
- Do you have enough income to meet your monthly mortgage payments, maintain your home, pay your monthly debts and other financial obligations, and still have enough left to pay for food and other living expenses?
- Does the refinance apply to the mortgage on the home you are currently living in?
- Do you have at least a fair credit history?
- Do you have your DD-214? (If not, your lender can you obtain it. This document is needed to obtain your Certificate of Eligibility.)
I’m ready to refinance.
If you’re ready to refinance or still have questions on what refinance loan is best for you, then speak to a licensed VA home loan expert to see if you qualify. Call (866) 240-3742 or complete a simple one-minute contact request form.