A VA refinance loan can be used for a variety of different reasons. If you qualify for a VA loan, it may be to your advantage to refinance your existing conventional or FHA mortgage into A VA Loan. Here are a few potential uses for a VA refinance loan.
1. Lower Your Mortgage Payments
One of the most common reasons that people utilize VA refinance loans is so that they can lower their monthly payment. Lowering your monthly mortgage payment can provide you with a lot of flexibility in other areas of your life. If you see that market interest rates are lower than what you are currently paying for your mortgage, you might want to consider refinancing your mortgage.
The VA has a program called the VA Streamline Refinance that can help you expedite and simplify the refinance process. The VA streamline refinance program allows you to refinance without all of the traditional paperwork and processes involved with a mortgage. You can refinance for the sole intention of taking advantage of lower interest rates. With this program, you cannot take out any cash. You will be able to pay off your existing loan balance and take a new loan with a lower interest rate.
2. Consolidate Debt
Another popular use for a VA refinance loan is to consolidate existing debt. With a VA refinance loan, you can get a much lower interest rate than what you can get for unsecured debt accounts, such as credit cards. Therefore, when you lower your interest rate by as much as 15 to 20%, you can pay off your debt much quicker. A consolidated loan will allow you to have one monthly payment and you can focus on paying down the balance.
3. Home Improvements
Home improvements is also another common reason for a VA refinance loan. Getting cash out of a VA refinance loan will typically be a very low-cost proposal. You will not have to worry about closing costs because the VA limits the amounts that can be charged. When you make improvements to your home, this will help add value to the house itself. With improvements, you can use the existing equity in the house to create even more equity for the future.
When using a VA refinance loan, the interest that you pay for the loan can be deducted from your income taxes. This lowers your taxable income, and the amount of money that you pay for the year in taxes. This makes a VA refinance loan much more desirable for home improvements than using other types of loans.
4. Purchase a Car
Another good use for a VA refinance loan is to purchase a car with the money. By doing this, you can save a significant amount of money on your monthly car payment. The loan would be amortized over a 30 year period instead of the normal five years for a car loan. Therefore, this can provide you with a lot of flexibility in your monthly budget.
5. $42,000 In VA Benefits