With interest rates at an all-time low, veteran homeowners should be looking to lower their home interest rate. The current rates for a fixed 30 year VA home loan are around 3.75%. The general rule is if the current interest rate you have is one point above the refinance rate it usually worth refinancing.
Many lenders, including Bank of America, offer veterans the opportunity to “streamline” their existing VA home loan. A VA streamline basically means a veteran currently has a VA home loan and wants to refinance that VA loan to a lower interest rate. If a veteran does not have a VA home loan and is looking to refinance into a VA loan that is referred to as a VA “cash out”. The VA streamline loan is a VERY simple process and does not require an appraisal. The VA cash out is a little more complicated and requires an appraisal. Veterans that currently have a VA home loan and a high-interest rate definitely should look into “streamlining” their rate and save thousands of dollars over the life of the loan.
Bank of America Brokers
Bank of America is a national lender that allows thousands of brokers to close deals for them. When a broker closes a deal they pay the lender a commission on the loan and many times offer lower rates giving an incentive for brokers to close more loans. A broker that closes thousands of loans for Bank of America can qualify for the “wholesale” rates. Many times these interest rates are better than the actual rates offered by the bank.
Why does Bank of America do this? The answer is pretty simple. They understand that giving lower rates to brokers gives the broker companies an incentive to close more loans and consequently padding Bank of America’s pockets. This kind of business ends up being a win-win situation for the broker, military homeowner, and the bank. The homeowners get lower interest rates, the broker is able to offer discounted pricing while making a commission and the bank is able to make money on the refinance.
Where should I get my VA Streamline?
Many lenders nationwide have the ability to streamline your VA loan. However, many lenders and brokers rarely deal with VA home loans and can lack the expertise needed to close these loans. There are brokers (Ex. LowVARates.com) that specialize in VA home loans. VA home loans have different requirements and regulations then a conventional or FHA loan. If the lender or broker does not have experience closing these loans veterans can get stuck in a messy situation. It’s important to go with a company that has dealt with veterans before and understands the ins and outs of VA home loans.
VA Approved Lenders
Thousands of brokers and lenders across the nation are approved VA lenders. The VA DOES NOT close loans, but approves or allows brokers and lenders to process these loans. Just because a lender or broker is “approved” does NOT mean the lender has experience closing VA home loans. Veterans, make sure to do your homework on the lender and find out if they have experience working with VA home loans.
Here are some of the questions you can ask the lender and loan officer:
1) Have you ever worked with someone with a VA home loan?
a. If yes, ask how many they have worked with. If no, move on to another lender.
2) What is the difference between a VA home loan and conventional loan?
a. If they say there is no difference they typically have never dealt with a VA loan
3) I have a VA home loan, would you suggest me staying with a VA loan?
a. If the lender looks to steer you away from your VA loan DO NOT listen. VA Loans are better loans, but some lenders do not work with them or are unwilling to put in extra work and will try to steer you to another loan.
It’s important for veterans to feel comfortable and have confidence in the lender they choose. There are thousands of lenders, but many lenders and brokers are not comfortable dealing with a VA streamline.
As always veterans, make sure to check VA Streamline rates through Bank of America, LowVARates.com and other brokers and lenders to see which can offer you the best streamline refinance for your situation.