If you already have a VA loan or you are a veteran sitting on a good amount of equity, refinancing is one of the smartest moves you can make, and the VA gives you two very different ways to do it. One path lowers your interest rate and your monthly payment with almost no paperwork, and the other lets you pull cash out of your home for things like paying off high-interest debt or handling a big expense. At PBT Bancorp we help veterans, active-duty service members, and surviving spouses sort through both options every day, and we are happy to walk you through which one actually fits your situation.
What is a VA IRRRL and when does it make sense
The VA IRRRL (sometimes known as a VA streamline refinance) is built for one thing, lowering the rate on a VA loan you already have. It is the easiest refinance product we offer because there is no appraisal, no income verification, and no asset verification required. You do not have to prove what your home is worth, you do not have to dig up pay stubs or tax returns, and you do not have to document your bank accounts. As long as your refinance produces a real benefit, usually a lower interest rate and a lower payment, the loan moves through quickly.
This is the loan to look at when rates have dropped since you bought your home, or when you are stuck in an adjustable-rate mortgage and you want the security of a low fixed rate. For example, refinancing a $300,000 VA loan from 6.5% down to 6.0% could lower your payment by roughly $100 per month, money that goes right back into your family’s budget every single month. There is no private mortgage insurance (PMI) on a VA IRRRL, which is true of all VA loans, so the savings are not eaten up by an extra monthly charge.
We also have a No Score VA IRRRL program, which means we do not need a credit score at all to refinance you. The only requirement is that you have been no more than 1x 30 days late on your mortgage in the past 12 months. Because of this we can often close loans that most other lenders simply are not able to, particularly for veterans whose credit has taken a hit since they first bought their home.
What is a VA cash-out refinance and when does it make sense
A VA cash-out refinance works differently because it lets you tap into the equity you have built and walk away with money in hand. It replaces your current mortgage with a new VA loan for a higher amount, and you receive the difference in cash. One of the nicer parts of this loan is that your existing mortgage does not have to be a VA loan to start with, so if you are currently in a conventional or FHA loan, a cash-out refinance is also how you move into the VA program and shed that monthly mortgage insurance for good.
This is the option to consider when you actually need the cash, whether that is paying off high-interest credit cards, covering home improvements, or handling a major expense that would otherwise sit on a much higher-rate loan. Pulling equity out at a VA mortgage rate is usually far cheaper than carrying a balance on credit cards, and consolidating that debt into one payment can free up real breathing room each month. Unlike the IRRRL, a cash-out refinance does require an appraisal and full income documentation, because the lender needs to confirm your home’s value and that the larger payment fits your budget.
On credit, we have lenders who accept credit scores as low as 500 on VA cash-out refinances, which is far more flexible than the 620 or 640 floor a lot of bigger lenders hold to. Of course, the higher your score, the better your pricing will typically be, but a lower score does not automatically close the door the way it does at most places.
How to decide between the two
The choice usually comes down to one question, do you want a lower payment or do you want cash. If you already have a VA loan and your only goal is to drop your rate, the IRRRL is almost always the right call because it is faster, cheaper, and far less paperwork. If you need to pull money out of your home, or you are refinancing out of a non-VA loan, then the cash-out refinance is the path that gets you there. Some veterans honestly are not sure which one fits, and that is exactly the kind of thing your loan officer will walk through with you before you commit to anything.
Why veterans choose PBT Bancorp to refinance
Our team has decades of experience working with Veterans and has helped over 3,000 families find their home or refinance and save money. PBT Bancorp is an FDIC member bank and a wholesale broker with access to over 35 wholesale lenders, so we are able to shop your loan and find better pricing than you would usually get walking into one big lender. Many lenders take 30 days or longer to close a refinance, but we are typically able to close in 2 to 3 weeks from start to finish, sometimes faster if your timeline requires it. There is no PMI on any VA loan, the same loan officer stays with you the whole way through, and we keep the process about as simple as a refinance can be.
If you think a refinance might be a good fit, the easiest next step is to let us run the numbers for you. Give us a call at 800-697-4371 or complete our online pre-qualification form and the whole first conversation takes about 15 minutes. We would be glad to help you put your VA benefits to work.
Refinance questions Veterans bring us
How do I know whether I want an IRRRL or a cash-out?
It comes down to whether you need money out of the home. If you just want a lower rate and payment, the IRRRL is simpler and cheaper. If you need equity for debt payoff, repairs, or anything else, the cash-out is the tool, and we run both side by side with you.
How much can I save with a refinance?
As an example, refinancing a $400,000 VA loan from 6.5% to 6.0% could reduce your monthly payment by over $130 per month, which is more than $1,500 a year. Your number depends on your balance and the rate spread, and the calculator above estimates it with your real figures.
Does refinancing restart my 30 years?
It can, and it is worth thinking through. A new 30-year term lowers the payment but stretches the payoff, so if you have been paying for years we can shorten the term on the new loan and keep your payoff date on track.
What does a VA refinance cost?
The IRRRL funding fee is 0.5% and a cash-out runs 3.30%, both can roll into the loan, and Veterans rated 10% or more disabled pay no funding fee at all. Lender charges vary, which is why we shop your file across our wholesale lenders.
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