Anyone Heard Of This?
Q: We bought our first home last June with a VA loan at 8.5%. We are getting lots of offers in the mail to refinance the house using a VA "Streamline" loan that states no appraisal and no out of pockets costs are needed. Has anyone heard of this? It is possible to refinance at a lower rate when the original loan is only a few months old?
A: -Believe it or not, it is a legitimate program! FHA and VA loans can be refinanced without an appraisal, and with minimum paperwork. Because they are insured, they are excellent investments for lenders as there is no risk to them, so they pay premiums to mortgage brokers to do the refinance which will add the loans to their portfolios. The premiums paid to the brokers are usually enough to pay the costs of title, escrow, etc, so it ends up being "no cost" to you! As long as rates are falling, you will probably get lots of letters offering you this program. You can do it again in about 3 months (as soon as they have confirmation of the new insurance) so don't worry if rates drop further after you have done it - just do it again! -Refer to the post I made to the FHA refinance on the newsgroup about the streamline refinance. At 8.5% interest, it is definately worth considering, but the streamline refinances are not "free."