VA Streamline Refinance 

 (Your mortgage professional will pull a “prior loan validation” from the VA’s website to prove your current VA loan status.) There are some additional eligibility requirements related to your type and length of service. In addition to those minimum service requirements, you’ll need to meet the following criteria to be eligible for a VA streamline refinance loan.

You do not need your certificate of eligibility (COE) for a streamline refinance. Most lenders request a prior loan validation request from the VA in lieu of a COE.

On-time payments

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. If you did have a late payment, say, eight months ago, you should probably wait four more months before applying.

Waiting period

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. Basically, the new monthly mortgage payments must be lower than the current payments. The VA also specifies how much lower by loan type:

  • If you’re refinancing a current VA fixed-rate loan to another fixed-rate mortgage, then the new interest rate must have a rate that is not less than 0.50% less than the previous loan.
  • If you’re refinancing a current VA fixed-rate loan into an adjustable-rate (ARM), then the new interest rate must have a rate that is not less than 2% than the previous loan. The lower interest rate may also not come solely from discount points.

To prove the benefit of the refinance, your lender provides a form stating the interest rate and payment of your current loan compared to the rate and payment of the new loan as well as how long it’ll take the refinance to pay for itself. For example, if the refinance costs you $3000 in closing costs, but you’re saving $300 per month, then you’ll make back the cost of the refinance in 10 months.

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