How to Refinance the Same Home You Own Through a VA Loan

By Shauna Zamarripa

Getting a VA loan can mean lower rates of interest and a better mortgage financing term than FHA or conventional home loans. There is no mistake that using your VA eligibility to finance your home is hands down the best way to obtain a mortgage. However, what if your original loan was not with VA? If you are looking to refinance the home that you own using your VA eligibility, here are some simple steps you can take to do so.

Go to the Veterans Administration website. Navigate to the VA home loan section and you will see a link that directs you on obtaining your VA certificate of eligibility. This is the very first task that must be completed, because without that piece of paper you will not be deemed eligible for a VA loan. After application, you will receive your certificate of eligibility within 4 to 6 weeks.

Check your credit. Refinance rates are based on your FICO, or credit score. There are three major credit reporting bureaus, and when a lender reviews your application for refinance they will take the middle range FICO score out of the three reports. Since these scores can vary as much as 200 points per credit report, it's important to check these scores prior to applying. If you find something on your credit report that is dragging down your score, you will need to correct it before you apply for refinance.

Get a comparative market analysis done by a real estate professional. Most of the time this will be a free service if you are looking to list your home to sell. However, if you are asking for one for the purpose of refinance, ask the Realtor what they would charge in order to provide you with one. Getting a complete CMA done will give you the information you need on the current market value of your home.

Shop at least 5 different lenders. Since rates and fees vary from bank to bank, check the banks that you do business with first. They will provide you with fee information and current interest rate information when refinancing your home with a VA loan. Also shop with local credit unions and mortgage brokers. Taking all of the information you receive from these entities and comparing them side by side will help you make an educated choice on who can earn your business.

Contact the lender that you have chosen to use. You can begin the application process by phone, online or in person. They will ask you to provide your proof of income (pay stubs), bank statements as well as 2 years worth of W-2 statements and your certificate of VA loan eligibility. Gather all of this together and provide it to the loan officer.

Let your loan officer know that you have pulled your credit reports, and what the scores were. The loan officer will have to pull your credit again to verify, however by knowing you have been pro-active in the process makes it easier to work with the terms and jargon that they will use during the approval process. Once they have submitted your file, you will receive disclosure statements in 1 to 2 weeks.

Sign the disclosure statements. This will be a packet that is about 20 to 45 pages long, and your loan officer can explain each page to you. These disclosures give you permission to move forward with the refinance. Once the disclosure package is submitted to underwriting, you will receive an approval in a matter of days.

Prepare for an appraisal. The bank will require an appraiser to visit your property in order to estimate what it would be worth in comparison to other properties in the area. The appraisal fee will run around $350 to $500 as of 2009, depending on the size of your home. Make sure that your home appraises for the highest value by providing your loan officer and appraiser with copies of all improvements done to the residence over the period of time you have lived there.

Schedule your closing at the title company. Your closing appointment on your new VA loan will take approximately 3 hours to complete and sign all of the paperwork. Budget your time for this accordingly. Once you have completed all of the documentation at the title company, your loan has successfully been refinanced using your VA eligibility.

If your credit needs repair, dispute negative items on your report or settle old accounts prior to applying for refinance.

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