We’ve had many veterans call in and ask what the VA Streamline loan is and why the VA Streamline Loan is so valuable in today’s real estate market as compared to the past. Here is a quick response…
A VA streamline loan is a VA loan that is available to veterans who are currently in a VA loan. It allows the veteran to lower his/her interest rate with about a third of the paperwork and hassle. It often times allows the veteran to receive cash back by receiving a refund on their escrow balance and deferring up to 2 monthly mortgage payments. This can add up to thousands of dollars in some instances.
Perhaps the biggest benefit of the VA Streamline program in today’s market is that it doesn’t require an appraisal (in most instances). This has given veterans a huge advantage over the general public in taking advantage of the low Interest rate environment that we find ourselves in. This is because most conventional borrowers (non-veterans) are required to first obtain an appraisal on their home which shows that they have adequate equity (usually 20%) in their home. We all know what a subjective thing that real estate values can be in today’s real estate market due to all the foreclosures that have been hitting the market. This has allowed VA Streamline borrowers to get their interest rates down regardless of the state of the real estate market. What a huge advantage!!
Rates are at historic lows and it is a phenomenal time to be taking advantage of VA Streamline program. If you would like to learn more about the VA Streamline program, you may contact a VA loan specialist at: 888-807-2871 or on the web at: www.expressvaloan.com.
As many of you know, HUD recenty began enforcing its new RESPA guidelines effective January 1, 2010. Such changes are some of the largest that that the mortgage industry has ever seen. One of the most notable changes is in respect to yield spread premiums (YSP). HUD is now requiring that yield spread premium not only be disclosed on the initial GFE but also that it be credited back to the borrower at closing.
So what does this mean for Veterans looking for a VA loan? Well… the first thing is that veterans can now have the peace of mind of knowing, up-front, whether or not they are being quoted a “par” rate. The “par” rate is the rate at which there is not a rebate or cost associated with rate itself. Secondly, any rebate that is associated with the rate will be required to be credited back to the veteran at closing.
In conjunction with this, the VA has come out reiterating its refusal to lift its 1% origination cap on VA loans. This legislation is having a very detrimental impact on brokers trying to offer VA loan products. The reason for this is because without the ability to make a yield spread premium, or the ability to charge more than a 1% origination fee, brokers will be left making less than 1% on each VA loan that they offer, that is, after continuing to pay VA’s non-allowable fees out of their own pocket. Accordingly, the VA loan program may no lose all of its profit incentives for brokers.
Accordingly, there are many that believe that the VA loan will become a loan program exclusively offered by banks. This is due to the banks’ ability to make a service relese premium (SRP) which does not have to be credited back to the veteran at closing which allows the loan officer to make a profit margin similar to what has existed in the past.
The important question remains … Will the loss of brokers ultimately lead to higher interest rates for VA loans due to the loss of competition in the VA loan marketplace? Many argue yes.
To speak to a VA loan specialist about these policy changes and how they are affecting VA Loan Rates, call 1-888-807-2871 or go to www.expressvaloan.com.
A VA loan makes more sense than a conventional loan in a couple of instances. The first instance is when the Veteran is purchasing a home and has very little money to put down. This is, afterall, the reason that the VA loan was created in the first place. This was to help those veterans returing home from war who may have had little cash or credit to purchase a home.
However, if the Veteran has 20% or more to put down on their home it makes more sense to do a conventional loan due to the absence of the VA funding fee. There is one exception to this. That is, if the veteran thinks that there is a good possibility that VA loan rates will go down in the near future. In this instance, it might still make more sense to do the VA purchase loan over the conventional loan so that the veteran may subsequently take advantage of what is known as the VA Streamline loan or “IRRL” loan.
This brings us to the second instance of when a VA loan makes sense over a conventional loan and that is when the Veteran is refinancing into a VA Streamline loan. The VA streamline loan is a loan only available to Veterans who are currently in a VA loan, are current on their payments, and are looking to lower their interest rate. There are a couple of other qualification standards but they are pretty minimal. The VA Streamline loan shows its true beauty in times just like now. Many VA Streamline Lenders do not require appraisals to do a VA streamline loan. This means that regardless of the state of the economy or real estate market, Veterans are still able to take advantage of a low interest rate environment such as the one we find ourselves in now. Tens of Thousands of conventional loan borrowers on the otherhand, are currently stuck in their conventional loans without the ability to refinance to a lower interest rate because of their home’s declining appraised value.
In very few instances does the VA cash-out loan make financial sense over some of the other cash-out loan programs available. This is due to the exorbitant VA funding fee charged to the Veteran for his/her subsequent use of their VA entitlement. In such instances one is better off pursuing loans such as the FHA Cash-out loan in today’s lending environment.
If you are considering a VA loan and would like more information, I would highly suggest that you talk to someone who specializes in VA Purchase & VA Streamline loans and who does not require an appraisal on VA Streamlines loans in today’s down trodden real estate market. An excellent resource for this is www.expressvaloan.com or by phone at 888-807-2821.
Many veterans are confused about the VA streamline loan. They don’t understand that the VA streamline loan allows you to refinance each time rates drop. The VA’s fee is only .5% for doing this, which is much less than was charged when you first got your VA loan. If you receive at least 10% disability from the VA then this fee is waived entirely.
Also, one should be careful when doing a VA Streamline loan so as to make sure that the savings justify the costs. The math is actually pretty simple. You should always ask your VA lender to do this analysis for you. A good rule of thumb is for the closings costs for your VA streamline loan to be paid back within 3 years. A responsible VA lender should provide this information to you the first time that you talk. We recommend trying www.expressvaloan.com to get this kind of service.
Rates are awesome! It is always surprising to see how the mainstream media can control people’s appetite to save money every month on their mortgage. VA loan rates are as low as they have been in years. Granted they are up ever so slightly from what they were a few months back they are still historic. The VA streamline program continues to be a very good option for those veterans who are already in a VA loan. VA Streamline loans continue to be especially popular for veterans who have a lending source that does not require and appraisal on their home such as www.expressvaloan.com. Appraisals are a very iffy proposition in this day and age as there appears to be alot of subjectivity out there with regards to real home values.
Regardless of what you may hear in the news, interest rates for VA Streamline loans remain very attractive. On the 30 year fixed programs rates remain in the low 5’s and upper 4’s.
The VA streamline loan program is a wonderfull program for verterans who are currently in a VA loan.
Military veterans and active personnel can qualify for a VA Loan. Visit http://www.expressvaloan.com to get more information and request a free 60 second quote from Express VA Loans.
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