VA Refinances in Pennsylvania and the rest of the nation have a few basic rules depending on the refinance goals of the Veteran. The VA classifies refinances in two different ways. If the Veteran is paying off their current VA mortgage and nothing else, their best option is the VA IRRRL program. Any other type of VA refinance is classified by the VA as a cashout refinance and subject to the VA Cashout guidelines listed below.
Let's start by breaking down the differences in VA Refinance options...
VA Interest Rate Reduction Refinance Loans, also known as the VA IRRRL , allow a Veteran to do what the name describes; Reduce the Interest Rate on their current VA mortgage. Sometimes referred to as a VA Streamline refinance, VA IRRRLs are only for the paying off of another VA mortgage, no other debts can be paid with this program.
While the VA does not require appraisals, credit or income verification with the VA IRRRL program, most lenders do require at least some basic verification of these items. Many lenders will allow a drive-by appraisal as opposed to a full appraisal, which at least reduces the appraisal cost to the veterans.
VA INTEREST RATE REDUCTION REFINANCE LOAN HIGHLIGHTS AND GUIDELINES
- Can only be used to payoff another VA mortgage; can not pay off other debts, other mortgages or receive cash
- Property does not need to currently be a primary residence
- More limited documentation than a standard refinance
- 100% Financing with no mortgage insurance
- Can be used to change a VA Adjustable Rate Mortgage to a Fixed Mortgage
- VA Allowable Closing Costs can be financed into new loan balance
- VA Funding Fee limited to .5%
If a Veteran does wish to include other debts, non-VA mortgages or receive additional cash at closing, they do have the option of refinancing under the VA Cashout Refinance program. Below are the programs available that most closely resembles the base VA guidelines for maximum loan to value under the VA Cashout Refinance guidelines...
VA CASHOUT REFINANCE OPTIONS
100% of the Appraised Value
- 620 minimum credit score
- Payoff of any mortgages on property only
- Payoffs of any non-mortgage debt not allowed
- Cash not allowed at closing
95% of the Appraised Value
- 640 credit score minimum
- Payoff of mortgages on property
- Payoff of non-mortgage debt allowed
- Cash allowed at closing
- Credit scores 620-639 allowed but limited to 90% of the Appraised Value
For addtional information on a VA Refinance in Pennsylvania feel free to contact me below...