How many times Can You Refinance a VA Loan?
How many times can you refinance a VA loan? The answer is actually there is no limit to how many times you can refinance a home. However, there are waiting periods on how soon you can refinance a home after you have already done refinancing or buying a home. You will have to think about does it makes financial sense if you refinance more than once. Rules of every loan type are varied; each has its own rules depending on what type of loan you have.
Most conventional loans have no waiting period for refinancing. You might be eligible for refinancing immediately once you have closed the loan. Now, if you have VA loan as your option, you might want to look into cash-out refinance.
A cash-out refinance is a mortgage financing option in which the old existing mortgage is replaced with a newer one with a larger amount of loan than the previously existing loan, this will help the borrower to get cash from the home mortgage. The cash-out refinance is one of the best options for borrowers, it gives the borrower all the benefits that they are looking for from standard financing. Now, cash-out refinance works when borrowers find a lender to work with them. The lender then assesses the previous loan term, and the balance of the loan needs to be paid off and from the borrower’s credit. Then the lender makes an offer based on the underwriting analysis, then the borrower gets a new loan that pays off the previous one and adds to the new loan term. Most lenders will let you take another cash-out to refinance 6 months of minimum after you have closed the previous loan.
But, if you have a VA loan, it will require you to pay six consecutive payments before you can apply for a new cash-out refinance. Most conventional loan lenders however have a limit of 80% of the value of your home. The total amount of the loan for cash-out refinance of VA loan is a bit different though, from most conventional loans. VA loan borrowers will be allowed to be paid 100% of the home value, this is because they are not required private mortgage insurance of PMI before they apply for a new cash-out refinance. Although, most lenders will put a cap on this value, which is around 90% of the total value of the home. While most conventional loans have a regulation for them to pay the private mortgage insurance first, then get up to 80% value of the home as the loan.
So, if you have a conventional loan as your option to buy a home or property, there is no limit for you to refinance your home, as long as you have closed the previous loan term. While VA loans have a limit for a refinance, in this case, a cash-out refinance requires a VA loan borrower to have paid six consecutive payments before they seek another loan. And also, there is another difference on the loan that you will get from a cash-out refinance. While most conventional loans will get you up to 80% total value of your home and let’s not forget it require you to also pay the private mortgage insurance, VA loan does not have to pay private mortgage insurance and could get up to 100% total value of the home, 90% total value of the home for most lenders though.
It is better for you to apply for a refinance as early as you get it. It is because refinancing restarts the 30-year loan period to year one. In most cases then, the longer you wait for a refinance, the longer you will have to pay for the interest and you will pay over the life of the loan in the end. The longer you wait, the more it takes time for you to pay off the mortgage, which means less you save in interest payments. You have to take this into consideration of going to decide whether it is a good idea to refinance or not. You might regret this as you take a refinance on a late period or close to closing loan period, as the process is going to start from year one again.
Now that you know how soon you can refinance a home, both for a conventional loan and VA loan, it is time for you to decide when should you refinance. If you want to refinance, then you have to be prepared for a private mortgage insurance fee as for a conventional loan. And you have to remember that you will only get up to 80% of the total value of the home for most lenders. While this is not the case for VA loaners, as they will get up to 100% total value of the home, most of the lenders will only want to give 90% total value of the home for the VA loan refinancing program. Then, you need to decide when you will take a refinance loan, even when there is no limit to refinance a loan, there is a time period on how soon you can refinance a home. If you decided to refinance as soon as possible, then you will need to close the existing loan period with the lender. As the process takes time, you might want to do it as soon as possible when you decide to refinance a loan. If you want to wait for a refinance program during your loan period, you might want to consider that it means you’ll be less saving in interest. Also, you need to remember that taking a refinance program will reset the period of the current loan. This means, that the longer you decide to take a refinance, the longer you have to deal with the loan period, which means a longer time, more money for interests, and less money to be saved. If, however, you have decided to save more money while not considering refinancing as an option, that is also possible.