Refinance your Mortgage with a VA Loan

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Quick and Easy Refinance with VA Loan

A VA loan is a type of mortgage backed by the U.S. Department of Veterans Affairs that grants veterans, military personnel and eligible surviving spouses access to affordable home financing. The VA loan program also extends beyond traditional home loans by offering VA loan refinancing programs. If you qualify for a VA loan but already have a conventional mortgage in place, you can refinance your home to take advantage of VA loan benefits. Alternatively, if you already have a VA loan but qualify for lower rates, you can streamline the refinance into another VA loan to take advantage of savings.

It’s not only easier to buy a home with a VA loan, it’s easier to refinance a home with one, too. VA loans don’t require borrowers to buy mortgage insurance and have lower interest rates than conventional mortgages.

To do so, you’ll need to find a participating lender that offers competitive deals, and that can take some time. Lenders offer a wide variety of refinance rates and the application process can vary, as can the quality of the customer service and overall user experience. With a little research, though, you should be able to find a lender that works best for your VA refinancing loan.

The 5 best VA loan refinancing lenders of 2019

Veterans United Home Loans — Most veteran-focused

Navy Federal Credit Union — Best credit union for VA refinancing

USAA — Best overall for military banking needs

Quicken Loans — Best customer service experience

Wells Fargo — Best face-to-face lender

Lender30-Year Fixed-Rate VA APR15-Year Fixed-Rate VA APRNumber of VA Loans in 2019
Veterans United Home Loans3.250-3.498%3.125-3.575%53,328
Navy Federal Credit Union3.281%3.351%29,955
USAA3.375-3.476%3.375-3.541%35,085
Quicken Loans3.85%3.111% – 3.549%*38,188
Wells Fargo (IRRRL Rate)3.594%N/A7,640

What is VA loan refinancing?

VA loan refinancing enables qualifying individuals to refinance their existing home loans through the following two programs: VA Streamline Refinancing and VA Cash-Out Refinancing. The biggest benefits of VA loans is that they come with low interest rates, no required down payment and no requirement for mortgage insurance.

VA Streamline Refinance Program

Homeowners with an existing VA loan may qualify for a streamlined refinance program called the Interest Rate Reduction Refinance Loan (IRRRL). This program has a simple application process and it often can lower the borrower’s monthly payment. It also as a lower funding fee than a cash-out refinance — 0.50% vs 2.15% to 3.3%.

An IRRRL doesn’t require an appraisal or underwriting process, although the loan requirements can vary by lender. You can avoid out-of-pocket costs by choosing to roll the funding fee into the new loan or by going with a slightly higher interest rate to encourage the lender to cover your costs.

VA Cash-Out Refinance Program

A VA cash-out refinance loan is designed to allow veterans with an existing VA or conventional loan to use their home equity to fund home improvements or other major purchases. It can also be used to refinance your conventional mortgage into a VA loan. You won’t necessarily receive cash back, though, even though this scenario would fall under the VA cash-out refinance program. In fact, not all lenders offer this option due to internal rules, but many will allow you to refinance up to 100% of your home’s value.

VA loan refinancing vs. conventional refinancing

Conventional loan refinancing typically requires a minimum credit score of 620 and at least 20% equity in your home. You will likely have to pay closing costs which include fees for appraisal, title, origination, flood certification and more, and often exceed the funding fee that comes with a VA loan. 

However, refinancing with a conventional loan may be more beneficial depending on your situation. For example, you may be better off choosing a conventional refinancing offer if it’s your second

owned property using a VA loan because the funding fee may be as high as 3.6%, potentially offsetting the other benefits of using a VA refinancing loan. In most cases, however, the VA loan will be more beneficial because of the low interest rates and flexible equity requirements. 

VA loan refinancing vs. FHA refinance

The Federal Housing Administration (FHA) has a loan refinancing program called FHA Streamline Refinance that is similar to the VA’s IRRRL program. To qualify, you must have a mortgage insured by the FHA that is current on payments and which would benefit from the refinance. In other words, you need to be able to lower your costs through a lower interest rate or more beneficial term in order to qualify. 

Additionally, if you have a conventional loan, you can apply to refinance through the FHA Secure program. Moreover, those with FHA or conventional loans can apply for an FHA 95% cash-out refinance and withdraw a portion of their equity. When comparing VA and FHA loan options, lenders will often accept borrowers with lower credit scores (down to 580) for FHA loans while most want to see at least 600 to 620 on VA loans. When it comes to the lowest interest rates, the lowest up-front costs and the lowest cost for insurance premiums, VA loans take the cake. If you can qualify for VA loans, this type of loan is usually the better route to take.

 VA loan refinancing vs. USDA refinance

The United States Department of Agriculture (USDA) also offers a lineup of refinancing options, including a streamline refinance for borrowers with existing USDA loans for refinancing without a new appraisal. There is a guarantee fee that’s similar to the funding fee for VA loans and it can also be rolled into the loan amount. While this program is beneficial for those with USDA loans, there is no cash-out option and the rates are often higher than VA loans. 

The 5 best VA loan refinancing lenders of 2019

Veterans United Home Loans — Most veteran-focused

Veterans United was established to take care of veterans and their families, so it’s no surprise it specializes in providing VA loans and educating veterans about homeownership. This tailored focus puts it at the top of the list for VA lenders, plus it offers competitive interest rates — 3.125%-3.575% APR — and was the top VA lender chosen by military families in 2019, originating 53,328 VA loans in that year alone.

Navy Federal Credit Union — Best credit union for VA refinancing

Navy Federal is a military focused credit union that serves more than 8,000,000 members. It offers a wide array of financial products, including VA refinancing, checking and savings accounts, personal loans and more. It was ranked fourth for closing VA loans in 2019, originating 29,955 of them in that year alone.

Navy is known for its competitive rates — 3.281%-3.351% APR — and willingness to match competitor rates. It offers a rate match guarantee to earn your business and if it can’t match other rates, you get $1,000 after you close your loan with the competition. 

USAA — Best overall for military banking needs

USAA is the largest bank designed for military members and their families. It offers VA loan refinancing as well as many other financial products, making it a one-stop shop for all your banking needs. USAA caters to military families and has great customer support, plus it charges no

origination fee and will cover the cost of appraisal, title and VA funding fee if you choose to refinance with an IRRRL.

Quicken Loans — Best customer service experience

According to the 2019 J.D. Power study, Quicken Loans has ranked highest in customer satisfaction for the 10th year in a row, making it a solid choice for our top lenders list. As one of the largest mortgage lenders in the country, Quicken Loans services 99% of its loans in-house. This means your loan is less likely to be sold to another company than with other lenders. Its VA loan rates range from 3.85% to 4.216% APR and the lender originated over 38,000 VA loans in 2019.

Wells Fargo — Best face-to-face lender

Last up is Wells Fargo. In today’s online world, it’s nice to be able to meet with a representative in person and have all your questions answered. Wells Fargo has more than 8,300 branches, so you can begin and complete the application process face-to-face or use their simple online application. The bank’s VA loan rate is still competitive 3.594% and it originated over 7,000 VA loans in 2019. 

The final word

If you’re a member of the military community, the VA loan refinance program can potentially save you a substantial amount of money over the life of your loan. VA refinancing loans are backed by the government so private lenders are able to offer more favorable terms to VA borrowers, but each lender is different. If you think you may be able to save by refinancing or want to cash out some of your equity, compare at least three VA loan lender offers to find the best deal.


Jessica Walrack

Jessica Walrack is a personal finance writer at SuperMoney, Interest.com, The Simple Dollar, and PersonalLoans.org. She specializes in taking personal finance topics like loans, credit cards, and budgeting, and making them accessible and somewhat fun.