VA refinance

VA Loan Reader Questions: Interest Rates For Refinance Loans

July 5, 2013

VA Loan Reader Questions: Interest Rates For Refinance Loans


A reader asks, “I would like to know more about the refinancing and credit check. I own a home in which I only owe around $80,000 fairly new, built 2003. I’m at around 7.4%, can I refinance and pay this house off and repay the new loan at around 3.5%? I only pay $650.00 a month now which is unheard of these days.”

The VA loan program for refinance loans is much like any other refinance loan–the borrower should shop around for a competitive interest rate and choose a lender that offers the best rates and terms. The Department of Veterans Affairs itself has nothing to do with setting the interest rate on VA loans except to issue general guidelines that such rates be “reasonable” and “customary” for the market and the type of loan, etc.

Borrowers and lenders negotiate the rates for all types of VA mortgages and refinance loans. You will find that the interest rates on VA refinance loans will vary depending on both the lender AND the borrower–if your FICO scores and repayment history are excellent, you will be offered more competitive interest rates than you would if your credit is poor.

That’s the way mortgage loans and refinance loans work, which is why many financial experts recommend borrowers take at least a year to prepare and save for a home loan.

You may need the time to work on your credit and repayment history. Not all VA refinance loans require a new credit check–streamline refinance loans for existing VA borrowers may not require a new credit application. Ask your lender about VA streamline refinance options that have no VA required credit check.

A lender is free to require a new credit application for VA streamline loans, but the credit check is not a VA mandated feature (for Streamline loans only).

Other VA refinance loans DO require a credit application–any cash-out loan will begin with an application much like the one you filled out for the original home loan. Cash-out refinance loans also require an appraisal to determine the current market value of the property, so be sure to budget for this expense should you choose to go the cash-out refinance loan route.

Do you have questions about VA home loans or refinance loans? Ask us in the comments section.


  1. linda jenkins

    My dad has passed away as of jan 2012, retired as staff sgt medically from air force, the monies my mom receives since his passing has put her in a financial bind. Her house payment is $900.00 a month w/ interest rate @ 9%. Pretty high! I'd like to see about getting it lower for thru the VA. She owes about $55,000-60,000. is it possible for her to go thru the VA to get a lower rate? As it would really benefit her!! Thanks,

  • Joe Wallace

    Surviving spouses of military members who died of service connected medical conditions, and in some cases those who died of non-service related conditions (but who had qualifying disabilities) may be eligible for the VA loan benefit. Contact the VA directly to see if your specific circumstance qualifies--call them at 1-800 827-1000.

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