Refinancing Non Owner Occupied VA Loans

A ton of Service Members received PCS Move Orders and found that the best thing they could do was rent out their home and move to the next base.  Now that they are landlords, they want to take advantage of the low interest rates on Mortgages via the VA Streamline Refinance.  Good News, while not all Investors will do those loans, our bank will make VA Loan Refinances on Investment Property.

In order to qualify for a VA Interest Rate Reduction Refinance, you must certify that you previously occupied the home that you are refinancing with a VA streamline. Some investors will not do these loans if the Veteran is not currently living in the home – so the trick is to find one that will.

Our company WILL allow you to qualify for a VA Streamline Refinance if you don’t live in the home. For example, if you lived in the home, then relocated and rented it out, you still may be able to apply for a VA streamline.

“The Catch”  for qualifying for this type of VA Streamline Refinance is going to be value. If the “Automated” Valuation model thinks you are underwater on the home, the Underwriter will likely require an appraisal.  To qualify for this non-owner occupied VA Streamline Refinance in North Carolina, the property must be valued at least as much as you owe on it.

The new loan will be based upon the “old loan” amount plus a Funding fee, which is basically VA’s form of PMI.  There’s no monthly PMI fee with a VA loan, it’s just that upfront fee. 

The VA funding fee is required on most purchase and refinance VA loans to defray the costs of the VA home loan program. In most cases, the VA Streamline funding fee is 0.50% of the new loan amount. This fee is almost always financed into the new loan so that the Service member does not have to pay it at closing.

The Funding fee is waived for veterans who are disabled due to service-related injuries. The VA makes this determination and provides the amount of the disability waiver to us via the Certificate of Eligibility (which we get updated).

Generally speaking, in North Carolina we must prove that you have a benefit from going through a refinance.  Generally, that’s pretty easy to do  – because your mortgage payments are getting cheaper. Sometimes, however, a Veteran will want to do a VA Streamline refinance so that they can go from a 30 year mortgage to a 15 year mortgage.  In that situation, even though your payment could go up – the benefit is seen in the shorter term.

You can also refinance a 15 year loan into a longer term loan, and reduce your payments that way. However, keep in mind that the most your loan term can increase is 10 years. So if you currently have a 15 year term, the longest loan you can refinance into will be 25 years.

Again, remember that VA Loans are for Primary Residences.. however, in some limited situations, you might be able to use a VA Home Loan to refinance a home you are renting out!

If you are considering a VA refinance, please call Steve and Eleanor Thorne, in Cary 919-649-5058.  We know how to make this program work for you – and we appreciate your Service!

Originally posted at NC FHA Expert