VA Loan Reader Question: Refinancing a VA Loan
We get plenty of questions about the VA loan process, including what borrowers should do when it comes time to refinance a home loan. One reader asked, “How do I start the process? Should I approach my current lender or should develop leverage with another lender?”
This is an important question because some home owners don’t think about shopping around for a new lender when it comes to refinancing. It’s easy to assume you should just stick with your original bank, and just as easy to assume that you can’t get a new lender to refinance. But the truth is, comparison shopping for a new financial institution is always in your best interest even if in the end you choose to use your current bank.
Interest rates, terms, and qualification requirements can vary greatly from bank to bank. Depending on what kind of refinancing loan you wish to apply for, VA refinancing could have you re-applying and doing a new credit check or you may be able to apply for a Streamline VA Refinancing loan if your needs match the program requirements.
Your lender isn’t the only participating VA lender in town–you can easily compare rates and terms, even apply for pre-approval for VA loans in some cases to see what your current borrowing power might be. Some borrowers ask their current lender for terms first, then use that information as a baseline when contacting other banks.
Some will take what they learn from other lenders and give their current bank a chance to match or beat the terms offered by another institution. There is nothing wrong with doing this–shopping around for the most competitive rate is one of your rights as a buyer, guaranteed by federal law.
If you do choose to approach other lenders, be sure to have all the information they’ll need–what kind of VA refinancing you seek, how long you wish to refinance for, whether you’re looking for energy-efficient upgrades through the VA Energy Efficient Mortgage program, and how long you’ve been paying on the current mortgage.
Not all lenders may be willing to offer some types of VA refinancing loans, which is another reason to compare banks before deciding who to give your business to–does your current lender offer the VA refinancing loan you need?