When refinancing your mortgage, it's easy to just get an offer from your current VA lender, sign the papers and be done. Convenience is great, but it could cost you. Shopping and comparing VA refinance options and loan quotes helps you get the refinance you need at a better price. Actually, your current lender should be the LAST outfit you ask for a quote. That way, you'll know how competitive (or not) that offer is.
Pick Your Program
Before contacting lenders for quotes, determine which type of VA refinance is best for you. VA refinance options include interest rate reduction refinance loans (IRRRLs) and cash-out refinance options. An IRRRL is a good choice if your primary goal is lowering your current mortgage rate, but if you want extra cash to pay off debt, make home improvements or meet other expenses, a VA cash-out refinance might be better.
Always compare quotes for the same type of refinance loan. The 30-year loans should be compared with other 30-year loans. And 5/1 ARMs should be compared only with other 5/1 ARMs. This is easy to do at LendingTree. Just type in your parameters in the LoanExplorer tool (make sure that you click "More Options" and indicate your VA status), and view real offers from LendingTree partners.
Mortgage lenders generally promote their lowest mortgage rates, but LoanExplorer allows you to get results for someone with your home value, in your state, with your credit rating – actual data you can work with. Clicking the "details" link for any program allows you to see the loan's costs, the payment and the lender's contact information.
Once you know what other lenders are willing to offer, you can contact your current lender. If you have a better offer on the table, your lender might match it. And if not, you have options.
VA Refinance Quotes
Here's what you'll look for when comparing mortgage pricing:
- Interest rates: Compare rates for the same kind of loan – 30-year fixed to 30-year fixed, IRRRL to IRRRL, cash-out refinance to cash-out refinance.
- Lender fees and charges: It doesn't really matter if the fees are called "origination fees," "processing and underwriting," or "hot dogs." The total lender fees is the bottom-line figure to look for.
- Third party charges: This includes escrow fees, title insurance, appraisal fees and more. These are not lender charges. You may be able to shop for title insurance and escrow services yourself and pay less for them – that depends on your location.
- Prepaid expenses: These are not actually costs related to your refinance. They are costs associated with homeownership – property taxes and homeowners insurance, for example.
- Your current mortgage lender may offer discounts or favorable loan terms to keep your business; if not, use competing quotes to negotiate better refinance terms.
- The Department of Veterans Affairs advises consumers that any lender that indicates that it's the only one that can refinance you is not being honest with you. Shop, compare and negotiate with mortgage lenders. Mortgage lenders expect this.
- If payments on your current VA mortgage are past due, you might still qualify for an IRRRL refinance if it will improve your financial position. The VA says in its guide that for IRRRLs to refinance loans 30 days or more past due (which must be submitted for prior approval), the following can be included in the new loan:
- The VA says on its site:
VETERANS ARE STRONGLY URGED TO CONTACT SEVERAL LENDERS WHEN CONSIDERING AN IRRRL. THERE MAY BE BIG DIFFERENCES IN THE TERMS OFFERED BY THE VARIOUS LENDERS YOU CONTACT.
Tips for Success
- late payments and late charges on the old loan, and
- reasonable costs if legal action to terminate the old loan has commenced.
When you're ready to shop for a VA home loan or refinance, check the LendingTree network of VA-approved lenders for free VA mortgage and refinance quotes.