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03 Jun 09 VA Streamline Refinance Loans for Veterans

In a recent VA mortgage article, Tom Kelly highlights the opportunity that military veterans and their families have financing and refinancing with VA home mortgages. He points out that one of the simplest ways for homeowners who have a VA mortgage is with the VA streamline refinance. The VA continues to offer the low rate streamline refinance programs to consumers who presently have a mortgage guaranteed by the U.S. Department of Veterans Affairs. The underwriters for VA loans typically like to see one year of consistent mortgage history before approving a streamline refinance.


In addition to the VA streamline refinance, mortgage insiders and VA loan officers like the Interest Rate Reduction Loan that has no “seasoning” requirement. In the mortgage industry, this type of seasoning refers to borrowers who recently completed a mortgage refinance transaction. In addition, these VA home loans (www.homeloans.va.gov) entail very little documentation and usually do not require an appraisal. In order to qualify, borrowers must have a VA home loan that is not delinquent. The VA mortgage rates vary on the type of loan (some thirty-year fixed rate loans are now less than five percent) and the length of the loan cannot exceed 360 months. Payments are due monthly. No more than two points may be rolled into this loan plus the allowable closing costs. A funding fee of approximately 0.5 percent is typically collected before closing and can be financed into the loan. Funding fee exemption is possible upon proper verification of disability.


VA mortgage lenders will assess that veteran borrowers meet basic program requirements including:

· The new monthly mortgage loan payment must be for less than the original loan.

· The VA mortgage rate must be for less than the original loan (unless refinancing from an adjustable interest rate).

· The term cannot exceed thirty years or ten years more than the original mortgage term (up to a max of 360 months).

VA home loans are guaranteed by the Department of Veterans Affairs and can be used to purchase a single family home, including a townhouse or condominium unit in a VA approved project, to build a home, and purchase and improve a home. Loans are assumable under certain conditions and do not have a prepayment penalty. The Veteran loan program began in 1944 when President Franklin D. Roosevelt signed the Servicemen’s Readjustment Act into law. This bill, which eventually became known as the GI Bill, allowed veterans to purchase homes without making a down-payment. VA offers the last known 100% no money down purchase loan.  The VA fixed rate mortgage enables borrowers the option of amortizing their home loan over 15-, 20-, 25- or 30-year terms.

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