We get tons of questions from folks who have moved to North Carolina from another area, becoming landlords in the process. Maybe you bought a home in Jacksonville, NC and now that you are out of the service, you are living in Charlotte. If you still have that home in Jacksonville, and you are renting it out, can you do a VA Refinance on Investment property? What about buying a new house? Can you use your VA Eligibility to purchase a second home?
VA Streamline Refinance Options For Investment Property
In order to qualify for a VA Interest Rate Reduction Refinance, you must certify that you previously occupied the home that you are refinancing with a VA streamline. Some investors will not do these loans if the Veteran is not currently living in the home – so the trick is to find one that will.
Our company WILL allow you to qualify for a VA Streamline Refinance if you don’t live in the home. For example, if you lived in the home, then relocated and rented it out, you still may be able to apply for a VA streamline refinance.
And if you have a FHA Loan that was originally owner Occupied (but is not rental property) we can help you refinance that property too!
“The Catch” for qualifying for this type of VA Streamline Refinance is going to be value. If the “Automated” Valuation model thinks you are underwater on the home, the Underwriter will likely require an appraisal. To qualify for this non-owner occupied VA Streamline Refinance in North Carolina, the property must be valued at least as much as you owe on it.
The new loan will be based upon the “old loan” amount plus a Funding fee, which is basically VA’s form of PMI. There’s no monthly PMI fee with a VA loan, it’s just that upfront fee.
The VA funding fee is required on most purchase and refinance VA loans to defray the costs of the VA home loan program. In most cases, the VA Streamline funding fee is 0.50% of the new loan amount. This fee is almost always financed into the new loan so that the Service member does not have to pay it at closing.
The Funding fee is waived for veterans who are disabled due to service-related injuries. The VA makes this determination and provides the amount of the disability waiver to us via the Certificate of Eligibility (which we get updated).
Subsequent Use
The VA streamline is not viewed as a subsequent use of your VA home loan benefit. You will not incur the 3.3% subsequent use fee because you used the VA streamline refinance program to lower your mortgage interest rate. Now, if you have partial entitlement, and you use that entitlement to purchase another property (supposing you qualify to do that) then you will be charged the higher fee on that loan.
Entitlement To Purchase Another Home
This loan does not use any of your VA home loan entitlement, nor do you have to prove remaining entitlement to obtain a VA streamline. Your remaining VA entitlement after purchase of the home, if any remains, does not change when you obtain a VA streamline.
Again, if you plan to use any partial entitlement to purchase another home, and you qualify to do that – the Certificate of Eligibility will need to be updated. We also suggest updating it if you’ve paid the mortgage down significantly since your purchased the home – as that will also free up some more eligibility/entitlement.
Loan Terms and VA Streamlines
Generally speaking, in North Carolina we must prove that you have a benefit from going through a refinance. Generally, that’s pretty easy to do – because your mortgage payments are getting cheaper. Sometimes, however, a Veteran will want to do a VA Streamline refinance so that they can go from a 30 year mortgage to a 15 year mortgage. In that situation, even though your payment could go up – the benefit is seen in the shorter term.
You can also refinance a 15 year loan into a longer term loan, and reduce your payments that way. However, keep in mind that the most your loan term can increase is 10 years. So if you currently have a 15 year term, the longest loan you can refinance into will be 25 years.
Again, remember that VA Loans are for Primary Residences.. however, in some limited situations, you might be able to use a VA Home Loan to refinance a home you are renting out!
If you are considering a VA refinance, please call Steve and Eleanor Thorne, in Cary 919-649-5058. We know how to make this program work for you – and we appreciate your Service!
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