If you currently have a VA loan and want to lower the interest rate, you are in luck because the VA streamline loan process is extremely simple. You do not have to undergo a full evaluation as you would for any other type of refinance; the VA streamline process is as simple as it gets. With a few simple pieces of information for verification purposes, you could start saving more money every month.
Your Credit History
According to the VA, your credit score does not matter for a VA streamline refinance, but some lenders will want to see it anyways just to make sure you still have decent credit since first taking out the loan. What the VA does require, however, is for the lender to go over your credit history. They are interested in knowing how many late payments you made in the last 12 months. If you have more than one late payment, whether housing or otherwise, you will be ineligible for the streamline program and will have to wait for another 12 months to elapse since the multiple late payments occurred. Some lenders, as stated above, take it a step further; however, and only allow certain credit scores. Every lender will differ on this requirement, so be sure to shop around if one lender turns you down because of a low credit score.
Your Original Appraised Value
The original appraised value of your home should be sufficient to refinance under the VA Streamline loan program in most cases. The VA does not require a new appraisal, however, the lender might if they are familiar with your area and know that the values greatly depreciated, putting you underwater, meaning you owe more than the house is worth. Because the general idea behind the streamline refinance program is to provide you with a lower rate, which usually means a lower payment, you will be better able to afford the loan and will be more likely to stay in it, rather than walk away from it, which makes the benefits of refinancing your loan on your side.
Proof of Residency
VA loans are strictly for borrowers that are purchasing or refinancing their primary residence. This is non-negotiable with the VA, so the requirement must be adhered to if you want to use the streamline program. The only exception to this rule is if you had to relocate due to your job and the job is located far enough away from the home that it does not make for an easy commute; then you do not to prove your residency, but these cases are few and far between. Because your entitlement can only be used one time and you need it in order to use the streamline program, you have to prove your residency so that the original entitlement can be reused on the refinance.
Employment and Income
You will have to state your place of employment as well as the amount of income you bring in, but you will not have to verify it in most cases. Lenders may use some overlays if they think the loan is risky in any way, which can occur if your credit score dropped or the value of the home dropped. In these cases, the lender may want to verify your income and employment to ensure that you can continue to make the payments on your home and that you are not trying to find a way to stall having late payments on the mortgage by refinancing. In most cases, however, the original income is able to be used for the refinance.
The VA Streamline Loan is very easy to apply for and qualify to receive. You are not required to go to the original lender that gave you the first VA loan – you are able to shop around. Make sure to try several lenders in order to make sure you are getting the best deal possible so that your goal of lowering your mortgage payment can be realized, allowing you to save money every month and gain equity in your home faster.