Refinancing with CalVet and VA

| January 1, 2010 | Core Information | No Comments

While the Feds have kept interest rates low, many Veterans believed they could hurry and refinance their existing homes using the VA or CalVet loan programs, before their homes lost all of their equity. The VA still offers many great options for refinancing, but unfortunately, CalVet remains a purchase-only program.

VA Refinancing

If you are a Veteran and currently have a VA, you can use your VA loan benefits to refinance using a loan process called VA Streamline, or IRRRL.

The Interest Rate Reduction Refinance Loan program gives Veterans the option to reduce their monthly mortgage payments by locking into a new, lower interest rate. You could also pull equity from your home to consolidate debt or afford improvements to your home.

Please call us for more information.

CalVet Refinancing

CalVet was designed as a purchase-only program for Veterans looking to buy real estate in California. This is a great way to buy your home due to competitive interest rates and an all-inclusive insurance program through CalVet. But if you are looking to use CalVet for refinancing, you may be disappointed to know the program is restricted from helping you.

State and Federal laws in place prevent the California Department of Veterans Affairs from “acquiring a home in which the Veteran has an interest of record”. Rare exceptions are made in the cases of construction loans or mobile homes on land, whereby the Veteran may already own the land or have a land contract and looks to build upon the land using CalVet financing.

So you may not refinance your existing home to a CalVet loan. But what about refinancing your existing CalVet home and lowering the interest rate? CalVet is prevented from doing that as well because the interest rate you received through the CalVet program is tied directly to the tax-exempt bond used as the funding source for your home.

While these limitations may seem especially extreme during a period of time when you most need help lowering your payment, CalVet has historically offered below-market interest rates to keep your payments as low as possible from the moment you purchased your home.