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A VA Streamline refinance lowers your interest rate by refinancing your existing VA home loan. By obtaining a lower interest rate, your monthly mortgage payment should decrease. You can also refinance an adjustable-rate mortgage (ARM) into a fixed-rate mortgage.
• No appraisal or credit underwriting package is required
• May be done with "no money out of pocket" by including all costs in the new loan
• When refinancing from an existing VA ARM loan to a fixed-rate loan, the interest rate may increase
• You may NOT receive any cash from the loan proceeds
A VA Streamline can only be made to refinance a property on which you have already used your VA loan eligibility. It must be a VA to VA refinance, and it will reuse the entitlement you originally used.
A Certificate of Eligibility (COE) is required.
No loan other than the existing VA loan may be paid from the proceeds of a VA Streamline. If you have a second mortgage, the holder must agree to subordinate that lien so that your new VA loan will be a first mortgage. You may have used your entitlement by obtaining a VA loan when you bought your house, or by substituting your eligibility for that of the seller if you assumed the loan. The occupancy requirement for a VA Streamline is different from other VA loans. For a VA Streamline, you need only certify that you previously occupied the home.
Generally, all Veterans using the VA Home Loan Guarantee benefit must pay a funding fee. This reduces the loan's cost to taxpayers considering that a VA loan requires no down payment and has no monthly mortgage insurance. The funding fee is a percentage of the loan amount which varies based on the type of loan and your military category if you are a first-time or subsequent loan user, and whether you make a down payment. You have the option to finance the VA funding fee or pay it in cash, but the funding fee must be paid at closing time. You do not have to pay the fee if you are a:
• Veteran receiving VA compensation for a service-connected disability;
• Veteran who would be entitled to receive compensation for a service-connected disability if you did not receive retirement or active duty pay; OR
• Surviving spouse of a Veteran who died in service or from a service-connected disability
The funding fee for second-time users who do not make a down payment is slightly higher.