Department of Veterans Affairs (VA) Home Loan Program
CharterWest’s mortgage staff can help you with your VA home loan needs. Read on to find out more about VA loans, eligibility requirements, and VA loan uses.
The main purpose of the VA loan program is to help veterans finance the purchase of homes with favorable loan terms. The rates of interest for a VA loan are competitive with rates charged on other types of mortgage loans.
The veteran will be able to obtain financing in most cases at a very favorable fixed rate and terms. For VA housing loan purposes, the term “veteran” includes certain members of the Selected Reserve, active duty service personnel, and certain categories of spouses. We have listed information on the streamline refinance program for existing VA homeowners. For more information on the VA program, please visit with one of our mortgage specialists.
Acceptable Uses for VA Loans
- To buy a home, including a townhouse or condominium unit in a VA-approved project.
- To build a home.
- To simultaneously purchase and improve a home.
- To improve a home by installing energy-related features such as solar or heating/cooling systems, water heaters, insulation, weather-stripping/caulking, storm windows/doors, or other energy efficient improvements approved by the lender and the VA. These features may be added with the purchase of an existing dwelling or by refinancing a home owned and occupied by the veteran. Check with us for details.
VA Streamline Refinances
VA has permitted streamline refinances on insured mortgages since the early 1980s. The streamline refers to the amount of documentation and underwriting that needs to be performed by the mortgage company and does not mean that there are no costs involved in the transaction.
The basic requirements of a streamline refinance are:
- The mortgage to be refinanced must already be VA-insured.
- The mortgage to be refinanced should be current (not delinquent).
- The refinance is to result in a lowering of the borrower’s monthly principal and interest payments.
- No cash may be taken out on mortgages refinanced using the streamline refinance process.
Companies may offer streamline refinances in several ways. Some companies offer “no cost” refinances (no out-of-pocket expenses to the borrower) by charging a higher rate of interest on the new loan than if the borrower financed or paid the closing costs in cash. From this premium, the company pays any closing costs that are incurred on the transaction.
Companies may offer streamline refinances and include the closing costs into the new mortgage amount. This can be done only if there is sufficient equity in the property, as determined by an appraisal. Streamline refinances can also be done without appraisals, but the new loan amount cannot exceed what is currently owed, i.e., closing costs may not be added to the new mortgage with those costs paid either in cash or through the premium rate as described above. Investment properties (properties in which the borrower does not reside in as his or her principal residence) may only be refinanced without an appraisal and, thus, closing costs may not be included in the new mortgage amount.
Generally, it is best to go with the option that offers the lowest cost rather than the lowest rate.