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If you're considering refinancing your VA mortgage, the first thing you'll want to do is see where rates are at.
VA refinance rates typically differ slightly from VA mortgage rates for loans being used to purchase a home, and may be slightly higher or lower.
What are VA refinance rates today?
"VA rates are lower than conventional rates as VA loans are insured by the government which makes them lower risk," says Jennifer Beeston, senior vice president of mortgage lending at Rate.
VA mortgages have some of the lowest rates available. Last month, 30-year refinance rates on VA loans were 63 basis points lower than refinance rates for conventional loans, according to Zillow data.
In November, VA mortgage refinance rates were an average of 5.99%, which is up 38 basis points from where it was the month before.
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Compare current VA refinance rates
See how today's VA refinance rates compare to other types of refinances.
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Understanding VA refinance options
There are two options for refinancing your VA mortgage:
- VA IRRRL (Interest Rate Reduction Refinance Loan): Also referred to as a VA streamline refinance, IRRRLs offer a faster and often more affordable process to refinance from a VA mortgage into a new VA mortgage. These are a good option for borrowers who want to lower their monthly payment or rate, or refinance an adjustable-rate loan into a fixed-rate loan.
- VA cash-out refinance: This type of refinance lets you take your home's equity and turn it into cash. It's also a good option for homeowners who want to refinance a different type of mortgage (like a conventional loan) into a VA mortgage.
Why consider a VA refinance?
Refinancing your mortgage might be beneficial if you want to:
- Lower your monthly payment. If mortgage rates have dropped since you first got your mortgage, you could lower your monthly mortgage payment by refinancing. Refinancing into a longer term will also lower your monthly payment, but this can be more expensive overall because it increases the amount you'll pay in interest over the life of the loan.
- Shorten your loan term. If you want to pay off your mortgage faster or save on interest, you might consider refinancing into a shorter loan term (like going from a 30-year to a 15-year mortgage). But this will raise your monthly payment.
- Tap into home equity. If you have a lot of equity in your home, you could use a cash-out refinance to turn some of that equity into cash. Funds from a cash-out refinance are often used for home renovations or to consolidate debt.
- Change the type of loan you have (and potentially get rid of mortgage insurance). VA cash-out refinances let you go from another type of mortgage to a VA loan. If you're currently paying private mortgage insurance or FHA mortgage insurance, it's possible you could benefit by refinancing into a VA loan. But be sure to consider the overall picture when deciding if this makes sense.
As with VA purchase mortgages, VA refinances don't require mortgage insurance, even if your down payment is less than 20%.
Additionally, if you get an IRRRL, you may not have to go through the underwriting process or pay for an appraisal, since the Department of Veterans Affairs doesn't require credit checks, underwriting, or appraisals on these loans. This can further limit your out-of-pocket expenses. However, some lenders will still require these things.
VA mortgages also have one of the best cash-out programs available, thanks to the fact that you can cash out up to 100% of your home's value (though some lenders may limit your loan-to-value ratio to 90%).
How to find the best VA refinance rates
Compare multiple VA lenders
"The biggest impact on your VA loan rate is the lender you are working with," Beeston says. "I cannot stress enough that if you are a veteran you need to shop the lender on interest rate and lender fee."
Shopping around and getting preapproved with multiple mortgage lenders can help you compare offers and make sure you're getting the best deal.
While shopping for lenders, Beeston says to watch out for lenders that avoid talking about rates.
"An old lender trick is to have the client focus on payment so they can't shop you on rate," she says. "With every client we always discuss where rates have been, where they are expected to go, what are rates are currently, and we give them an option to lock their interest rate while they shop."
Don't neglect overall costs
You will need to pay a funding fee to refinance your VA mortgage. For IRRRLs, this fee is equal to 0.5% of the loan amount. On a cash-out refinance, the fee is 2.15% for your first refinance and 3.3% for every refinance after that. This cost can be paid at closing or financed into your loan.
You'll also need to pay any closing costs you incur during the origination process, including lender fees. These costs can vary widely from one lender to the next, so be sure to ask about any lender fees you'll pay when you're comparing rates. Just because a lender has the lowest rates doesn't mean its overall costs are low.
Work on improving your credit first
Depending on the type of VA refinance you get, your credit profile can also play a role in the rate you're offered.
VA cash-out refinances require full underwriting, meaning your lender will look at your credit and finances before approving you for the loan. If you have a great score, you could get a lower rate. IRRRLs, on the other hand, typically don't require a credit check.
Use VA refinance calculators
Our free mortgage calculator can help you determine how different rates could impact your monthly mortgage payment.
Mortgage Calculator
- Paying a 25% higher down payment would save you $8,916.08 on interest charges
- Lowering the interest rate by 1% would save you $51,562.03
- Paying an additional $500 each month would reduce the loan length by 146 months
You can also find refinance-specific calculators online that can help you compare your current loan to a potential refinance.
VA mortgage refinance FAQs
Mortgage rates can vary quite a bit depending on what state you're in and the lender you're working with. In November, VA refinance rates averaged around 5.99%, according to Zillow data.
Some lenders may tend to have lower rates than others, but there's typically not one lender that consistently offers the lowest rates across the board. The lender that offers you the best rate might offer an average or high rate to someone else. This is why shopping around and finding the right lender for you is so important.
It can be cheaper to refinance with a VA loan, especially if you get an IRRRL, which doesn't require a credit check, underwriting, or an appraisal. VA loans generally have fewer costs and lower rates than other types of mortgages, making them an affordable option for those who qualify.
Yes. Just like you can put 0% down on a VA purchase loan, you can also refinance with an LTV up to 100%.
Whether you can qualify for a VA refinance depends on the type of loan you're getting, but you'll need to be in a military family and meet certain criteria. With an IRRRL, you'll need to already have an existing VA loan, but you may be able to qualify without a credit check. VA cash-out refinances, on the other hand, can be done no matter what type of loan your current mortgage is, but you'll need to go through the standard credit check and underwriting process.
A VA refinance may take between 30 and 45 days to close, but it depends on the details of your loan.
No, there's no limit to how many times you can refinance your VA loan, but you'll need to wait at least 210 days following the first payment on your current VA loan before you'll be able to refinance.
What's a Zestimate?
