You have several mortgage financing options that I review below.
Option 1: Refinance Your Existing VA Mortgage with a VA Streamline Refinance
A VA Streamline Refinance, also known as a VA Interest Rate Reduction Refinancing Loan (VA IRRRL), enables you to refinance your current VA mortgage with reduced borrower qualification requirements including no credit score or appraisal report. As long as the interest rate on your new loan is less than the interest rate on your current loan, the VA streamline refinance process saves you money and time. We provide a thorough overview of the VA Streamline Refinance Program and review the Pros and Cons of the VA Streamline Refinance Program on FREEandCLEAR.
The current VA mortgage rate for a 30 year fixed rate loan is approximately 3.250% and the VA mortgage rate for a 15 year fixed rate loan is approximately 2.750%. In your case, based on a $100,000 mortgage balance and a 2.750% interest rate for a 15 year loan, your monthly mortgage payment would be $679. As a reference point, the monthly payment based on a 3.250% interest rate for a 30 year loan is approximately $435. Please note that interest rates vary by lender, borrower and other factors and these monthly payment figures do not include property tax, homeowners insurance and other applicable housing expenses.
Closing costs also vary by lender and loan amount but should be approximately $1,000 - $1,500 for a $100,000 loan. It is important to highlight that although VA Streamline Refinance Program guidelines do not require credit or appraisal reports some lenders require these report to satisfy their internal underwriting policies. Your closing costs could increase if the lender requires these reports or additional documentation.
We always recommend that you shop multiple lenders to find the mortgage with the lowest interest rate and closing costs. Even if your current lender offers VA Streamline refinances, you are not obligated to work with that lender and you should compare mortgage quotes from multiple lenders. You can review VA lenders in your area by clicking INTEREST RATES We advise you to contact at least four lenders as comparing proposals is the best way to save money on your mortgage.
Option 2: Apply Mortgage Acceleration to Your Existing Mortgage
Another option for you is to keep your existing mortgage but apply mortgage acceleration, which means pay more than the required monthly payment. Mortgage acceleration, or overpaying your mortgage, enables you to pay down your mortgage faster which reduces your loan term and potentially saves you thousands of dollars in interest expense over the course of your loan. You do not pay extra fees to accelerate your mortgage and you avoid the additional closing costs you would pay if you refinanced. The downside of mortgage acceleration is that you are required to make a higher monthly payment than you are currently paying. We provide a thorough overview of How Mortgage Acceleration Works on FREEandCLEAR and you can use our Mortgage Acceleration Calculator to evaluate different acceleration scenarios.
Option 3: Refinance and Apply Mortgage Acceleration to Your New Loan
This third option is a combination of the first two options but provides you with greater flexibility. With this option you refinance your existing mortgage using the VA Streamline Refinance Program but you select a 30 year mortgage and apply mortgage acceleration to your new loan. You can accelerate your mortgage by any amount but in this case, instead of making the $435 monthly payment required by a 30 year loan with a 3.250% interest rate, you accelerate your mortgage and make the $679 payment that you would with a 15 year loan. That enables you to basically make a 30 year mortgage a 15 year mortgage, which saves you thousands of dollars in interest expense, but you also preserve the financial flexibility to make the lower payment required by a 30 year mortgage if your financial situation changes. We provide a detailed explanation of How to Combine Mortgage Acceleration with a Refinance on FREEandCLEAR.