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If you're considering refinancing your VA mortgage, the first thing you'll want to do is see where rates are at.
VA refinance rates typically differ slightly from VA mortgage rates for purchase mortgages, and may be slightly higher.
What are VA refinance rates today?
"VA rates are lower than conventional rates as VA loans are insured by the government which makes them lower risk," says Jennifer Beeston, senior vice president of mortgage lending at Guaranteed Rate.
VA mortgages have some of the lowest rates available. Last month, 30-year refinance rates on VA loans were 76 basis points lower than refinance rates for conventional loans.
But rates have been increasing in recent months, and VA loans haven't been exempt from these increases. In November, VA mortgage refinance rates were an average of 6.59%, which is around 40 basis points down from where they were the month before. Rates have continued trending down in recent weeks, even dipping below 6%.
Compare current VA refinance rates
See how today's VA refinance rates compare to other types of refinances.
What type of VA refinance should you get?
There are two options for refinancing your VA mortgage:
- Interest Rate Reduction Refinance Loan (IRRRL): Also referred to as a VA streamline refinance, IRRRLs offer a faster and often more affordable process to refinance from a VA mortgage into a new VA mortgage. These are a good option for borrowers who want to lower their monthly payment or rate, or refinance an adjustable-rate loan into a fixed-rate loan.
- Cash-out refinance: This type of refinance lets you take your home's equity and turn it into cash. It's also a good option for homeowners who want to refinance a different type of mortgage into a VA mortgage.
How to get a good VA refinance rate
"The biggest impact on your VA loan rate is the lender you are working with," Beeston says. "I cannot stress enough that if you are a veteran you need to shop the lender on interest rate and lender fee."
Shopping around and getting preapproved with multiple mortgage lenders can help you compare offers and make sure you're getting the best deal, both in terms of the rate you're offered and other loan costs.
While shopping for lenders, Beeston says to watch out for lenders that avoid talking about rates.
"An old lender trick is to have the client focus on payment so they can't shop you on rate," she says. "With every client we always discuss where rates have been, where they are expected to go, what are rates are currently and we give them an option to lock their interest rate while they shop."
Depending on the type of VA refinance you get, your credit profile can also play a role in the rate you're offered.
VA cash-out refinances require full underwriting, meaning your lender will look at your credit and finances before approving you for the loan. If you have a great score, you could get a lower rate. IRRRLs, on the other hand, typically don't require a credit check.
VA refinance benefits
VA mortgages are extremely affordable thanks to their low rates and limited extra costs.
As with VA purchase mortgages, VA refinances don't require mortgage insurance, even if your down payment is less than 20%.
Additionally, if you get an IRRRL, you may not have to go through the underwriting process or pay for an appraisal, since the Department of Veterans Affairs doesn't require credit checks, underwriting, or appraisals on these loans. This can further limit your out-of-pocket expenses. However, some lenders will still require these things.
VA mortgages also have one of the best cash-out programs available, thanks to the fact that you can cash out up to 100% of your home's value (though some lenders may limit your loan-to-value ratio to 90%).
VA refinance costs
You will need to pay a funding fee to refinance your VA mortgage. For IRRRLs, this fee is equal to 0.5% of the loan amount. On a cash-out refinance, the fee is 2.3% for your first refinance and 3.6% for every refinance after that. This cost can be paid at closing or financed into your loan.
You'll also need to pay any closing costs you incur during the origination process. If you get an IRRRL, you can roll these costs into the loan. Cash-out refinance borrowers will need to pay these costs at closing, and can use the proceeds from the loan to do so.
Mortgage calculator
Our free mortgage calculator can help you determine how different rates could impact your monthly mortgage payment.
VA mortgage refinance frequently asked questions
What are current VA refinance rates?
Mortgage rates can vary quite a bit depending on what state you're in and the lender you're working with. In general, VA refinance rates have been relatively low in recent weeks, dipping below 6%.
Who has the best VA refinance rates?
Some lenders may tend to have lower rates than others, but there's typically not one lender that consistently offers the lowest rates across the board. The lender that offers you the best rate might offer an average or high rate to someone else. This is why shopping around and finding the right lender for you is so important.
Is it cheaper to refinance with a VA loan?
It can be cheaper to refinance with a VA loan, especially if you get an IRRRL, which doesn't require a credit check, underwriting, or an appraisal. VA loans generally have fewer costs and lower rates than other types of mortgages, making them an affordable option for those who qualify.
Can I do a 100% VA cash-out refinance?
Yes. Just like you can put 0% down on a VA purchase loan, you can also refinance with an LTV up to 100%.