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Ever since 1944, the Veterans Administration of the United States has been financing and refinancing homes for veterans of the armed services under the Servicemen Readjustment Act, which you may know under its more common name, the G.I. Bill of Rights. Under the G.I. Bill, veterans can be easily approved for a home loan or home loan refinancing that is guaranteed by the United States government, although the actual loans are made by private lenders and lending institutions as well as mortgage companies and banks.
VA home loans and refinancing packages are available to those who served our country in the military. Refinancing your home allows you to take advantage of a lower rate or interest and to lower your monthly payments to a more manageable amount. Refinancing to just ½ of a point lower in interest can save you thousands of dollars over the lifetime of the VA loan.
New Program For VA Home Loans Recently Announced
In addition, new legislation signed under President Barack Obama has another option for veterans who are looking to refinance their home mortgages known as the Making Home Affordable program. Under the new program, millions of homeowners will be able to refinance to a more affordable rate that can help them stay in their homes and keep more money in their wallets.
To qualify for the program, the requirement states that your first mortgage must not be more than 105% of the current market value of the home. Simply put, if your home appraises for $100,000, you cannot owe more than $105,000 on your current mortgage. This program allows many VA homeowners and mortgage holders to modify and refinance their loans to an amount that they can handle now and on down the road.
Many homeowners find that when they go to refinance their home, the current market value has dropped so much that they are unable to find a lender who will provide them with the new refinancing they need. With the Making Home Affordable program, VA homeowners are able to refinance in most cases.
Reasons VA Refinancing Can Be Your Best Option
Another great option of this program for VA homeowners is that the lender will give them a good faith estimate that will allow them to see the new rate of interest and the new payment amount as well as other terms that they can compare to what they are paying now. This allows the homeowner to see how they can save and determine if refinancing is the right step for them to take at this moment. In most cases, refinancing is right, but of course there are always exceptions. With the current low interest rates, however, most homeowners will find VA refinancing perfect for their needs.
In addition, those homeowners who are holding a mortgage that is an ARM (adjustable rate mortgage) may find that their mortgage is more stable when they switch to a more predictable fixed rate mortgage that allows them to avoid interest only payments, balloon payments and of course, adjustable interest that can fluctuate with changing market conditions.
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