Cash-Out Refinance Loan
If a homeowner has sufficient equity built in his or her home, he or she can use a cash-out refinance to turn the equity into cash to be used however he or she pleases. There are no restrictions on how the cash is used. When refinancing with this loan, a homeowner can take out a loan for a higher amount than his or her current mortgage and receive whatever is left over, after paying off the existing mortgage, in the form of cash. The cash can be used to pay off debt, pay for home repairs or maintenance, or pay for personal expenses.
Homeowners who find themselves in a significant amount of debt may find an encouraging solution in the cash-out option. With this loan, a homeowner can combine some or all of his or her debt into one loan. Doing this could lower his or her monthly costs. Instead of receiving multiple bills and paying different lenders, a homeowner could consolidate many payments into one. Consolidating debt can not only reduce monthly costs, but it can also help simplify the process of paying bills each month.
Rate/Term Refinance Loan
A homeowner who would like to refinance his or her current conventional mortgage can switch from a conventional loan to a VA mortgage using the rate/term refinance option. Refinancing can give the homeowner a lower, fixed interest rate, which would also lower his or her monthly mortgage payment. Refinancing with this type of financing would also give the homeowner access to all of the other great benefits of a VA home mortgage, including no mortgage insurance.
Interest Rate Reduction Refinance Loan (IRRRL)
Another refinancing option is the Interest Rate Reduction Refinance Loan. This is a streamlined option known for its quick processing. It allows a homeowner who already has a VA loan to lower his or her rate, which will in turn lower the loan's monthly mortgage payment. Other terms of the loan can also be change, if desired.
If interest rates decrease after a homeowner has taken out a VA mortgage, the IRRRL can be used to lower his or her rate quickly and easily. Homeowners can also use an IRRRL to switch from an adjustable interest rate to a fixed rate or to change the length of their loans to better suit their needs.
A VA refinance mortgage can be used to procure a lower interest rate, consolidate debt, receive extra cash, and/or to change the terms of a homeowner's original mortgage. With rates low, it is a great time to take advantage of this exclusive benefit.
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