You’ve probably heard stories about the VA Streamline Refinance. There are both good and bad stories out there. Some claim it saved them hundreds of dollars each month. Others claim they were duped. The key to a successful VA Streamline Refinance is knowledge. You should know your options and what you are eligible to receive. When you do your homework, the process should only take a few weeks. We explain how here.
What is a VA Streamline Refinance?
The VA Streamline Refinance is a simplified refinance program. The goal is to lower your current mortgage payment. In some cases, your payment may not lower. But, you refinance from an adjustable rate to a fixed rate loan. This saves you money in the long run. Fixed rate loans are known for their predictability. This usually means less risk.
The program does not require you to provide proof of very much. Verification of your income, assets, credit, or the value of your home isn’t necessary. You must prove only that:
- You occupied the property as your primary home
- You made your last 12 months of VA loan payments on time
Based on these two factors, you can secure a VA refinance. This is why the process is so short. You don’t need an appraisal. You don’t even need your credit pulled. But some lenders may still need these things, just to be safe.
The Lender Determines the Timeline
The lender you choose determines your timeline. Some lenders are backed up. They take a long time to get loans through the pipeline. Others are on the ball and get borrowers in and out. It pays to ask a lender what their turnaround time is at the time of application. This way you have an idea of what to expect. Even though your loan doesn’t need an appraisal and needs little underwriting doesn’t mean you won’t have to wait. This should be one of the first questions you ask a lender.
Does the Lender Require Overlays?
Another issue that could slow the VA Streamline process down is lender overlays. The VA might not need your credit score, proof of income or an appraisal. But, a lender might want these things. Before you apply with a lender, ask about their requirements. Don’t ask just what the VA requires. Ask what the lender wants outside of the VA requirements.
For example, if they want an appraisal, this could easily tack on 2 weeks to the process. If the lender wants to verify your income or credit score, it may not add as much time. But, keep in mind, the underwriter must evaluate everything. If he sees something he doesn’t like, he could ask for more information. This further complicates the process, making your timeline longer.
How Prepared are You?
The more documents you have ready for your lender, the faster the process goes. Luckily, for the streamline program, you don’t need very much. But you can help move the process along faster. Ask your current loan servicer for a history of your payments. You can also provide the proof that you occupied the property as your own.
If the lender wants to pull your credit, are you ready? Did you look at your credit score and history recently? You can make sure everything is accurate. You can also make sure there is nothing negative reporting. If there is, take the time to fix it before applying. This may help speed things along. Negative items on your credit report raise red flags for the lender. They may then require more information, prolonging the process.
The Title Search May Slow Things Down
One thing no loan will close without is a title search. Knowing if there are liens on the property is important. Depending on how long ago you purchased the home, the search could take a little while. If you use the same title company, it may not take as long.
Ask the title company about their turnaround time. This will help you gauge how long you may have to wait. Even though the VA doesn’t require very much, there is no getting around the title search. The lender needs to know if there are any outstanding liens on the property. If there are, they must be satisfied or the loan can’t close.
This is the case because once you pay off the current mortgage, any other liens move up in position. For instance, if you have a mechanic’s lien on the property, it would take first place on the title. Any new debts that come after it would come in second. No lender will provide new funding knowing they will be in second place. This is why the title search is so important.
There are many pieces to the puzzle regarding how long a VA Streamline Refinance should take. In reality, you could get it done in a few weeks. However, it depends on the workload of many involved parties. The lender, title company, and any other third parties that play a role matter. Of course, an appraisal would slow the process down the most, but that is usually unnecessary.
The best way to speed the process along is to be as prepared as possible. Find out what your lender requires and provide everything at once. Do your homework and look at your credit. Make any changes you need to make. You should also research the various lenders. Find out their turnaround times and choose the one that offers the best times as well as the best terms. In the end, you get the same loan. It just depends which lender you choose.
We usually recommend that you shop with at least 3 lenders. This way you know you are getting the best deal available to you. Don’t jump hastily into any offer that promises to lower your payment. This is the goal of the VA Streamline program. Find the lender that fits your needs the most, including the turnaround time that you need.