By refinancing your existing VA loan, you can reduce your interest rate, access the equity in your house, or even convert your conventional loan into the VA loan program. You have two options when it comes to refinancing your mortgage:

• Using what's known as an Interest Rate Reduction Refinance Loan, or IRRRL, which is part of the VA Streamline Refinance program.
• Using a VA refinancing with a cash-out option.

VA Streamline Refinance

Choose this VA refinancing loan if you have the following:

• Already have a mortgage via the VA.
• Want to refinance to a lower interest rate to save money or refinance to a fixed-rate mortgage from an adjustable-rate mortgage?
• Would like not to borrow any money against the equity in the property.

You must have a VA mortgage to be eligible for an IRRRL refinancing. Also, the interest rate on your new loan must be lower unless you are refinancing out of a VA loan with an adjustable rate.

Unlike most other refinances, your house doesn't have to be your main residence. The only requirement is that there must have been a previous tenancy. You may refinance your mortgage even if you don't live in the house if, for example, you're moving to a different location but still want to maintain the property you bought for your first family.

You can also include the new loan's closing fees into the VA streamline loan if you want to do so. Birk notes that to qualify for streamline refinancing; certain VA lenders may need a certain minimum credit score, minimum income, or an appraisal. Additionally, they may ask you to demonstrate that you have been on time with any mortgage payments during the last year.

VA Cash-Out Refinance Loan

Choose a VA cash-out refinancing loan if you:

• Do you want to convert some of your home's equity into cash?
• Have a conventional loan or VA loan.
• You can pay all closing charges in advance or with cash taken out of your account.

You may convert your existing mortgage, whether a conventional or VA loan, into a VA cash-out refinancing loan if you wish to access the equity in your house and use it for financial purposes. When you get this kind of refinancing, the lender will always demand a minimum credit score and an appraisal from the VA. Additionally, the property has to be your principal residence.

You may be able to get financing for up to one hundred percent of the value placed on your property; however, the precise amount you will be able to borrow may vary depending on the lender you choose.

You won't be able to roll the closing expenses into the new loan as you can with the VA Streamline Refinance since you have to pay for everything upfront. But you may use part of the cash you take from the refinancing to pay closing fees.

VA Refinance Fees

In general, VA refinances loans are subject to the same costs associated with other types of mortgage refinancing; however, one charge is exclusive to the program and is known as the VA funding fee.

An IRRRL has a financing charge equaling 0.5% of the total loan amount.

Unless this is not your first VA loan, the fee for a cash-out refinancing with the VA is 2.3% of the entire loan amount. On future VA loans, the financing charge is 3.6% of the loan amount.

The VA financing fee is waived if you are the spouse of a service member who died in the line of duty or from a service-related injury or if you suffer a handicap due to your military service. Members of the armed forces currently serving their country and have been awarded the Purple Heart are exempt from paying the funding fee. On the other hand, VA loans do not need mortgage insurance, in contrast to conventional loans and FHA loans, which the Federal Housing Administration guarantees.

VA Loan Refinance Eligibility

Credit score for VA refinance

According to Jimmy Vercellino, the minimum required credit score and annual income might differ from one lending institution to the next. According to Vercellino, the minimum credit score might vary from 580 to 640 points. According to Birk, a credit score of 620 is often considered the bare minimum.