By Hazel D. Seidman
The Internet, television outlets and radio airwaves are buzzing with advertising about mortgage refinancing. However, veteran homeowners that need reduced interest rates should first consider the perks of a VA streamline refinance. In fact, we?d like to share some key information on the differences between traditional refinancing and the VA streamline refinance.
First and foremost, conventional underwriting guidelines does not take into consideration the needs of veteran borrowers. Loan guidelines are restrictive and may include higher interest rates, lower LTVs, strict credit prequalification, sizeable out-of-pocket costs, and a penalty for prepaying the loan. The bottom line is that conventional loans require much more paperwork only to leave borrowers waiting for an uncertain approval process to run its course.
Conversely, the VA streamline refinance, also referred to as an Interest Rate Reduction Loan (IRRL), is a much friendlier transaction. The first thing to keep in mind is that VA loans are specifically designed to address the needs of veterans. Moreover, veteran, loan eligibility requirements are less stringent, including no appraisal requirements (upside down equity okay!) and no credit or asset scrutiny. Veterans with credit scores below 640 also have an opportunity to apply and receive financing approval! But the perks keep coming. Veteran borrower?s can expect to pay no upfront or out-of-pocket fees, and may have the option to defer up to two mortgage payments while rolling closing costs into the loan transaction. Now these are cost savings conventional mortgages simply fail to beat. Dollar for dollar, mortgages specifically designed for veterans are the best value.
And if you thought these loans were only good for the veterans and their families, think again. Perhaps not surprising, financial institutions have a plenty reasons for writing veteran loans. The Veteran?s Administration Department has been guaranteeing a portion of VA loans since the passage of the Service men?s Readjustment Act more than 60 years ago. As a consequence, the lender experiences less risk and you receive a lower interest rate. Undoubtedly, your VA mortgage rate will be lower than conventional, refinance alternatives.
After reviewing these differences, it?s easy to understand why VA loans are so attractive. If you need to reduce your interest rate, with little or no out-of-pocket costs, while saving more of your hard-earned money, a VA streamline refinance is for you. Contact a VA-approved lender for more information about the perks of VA loans, as well as reviewing the Veteran?s Administration Department website.
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