The Best VA Refinance Lenders of 2019
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If you are currently serving in the U.S. military or are a veteran of our armed forces, the VA home loan likely offers you the easiest way to qualify for a mortgage. The Veterans Affairs program can offer you the chance to buy a home with no down payment, no minimum credit score and more flexibility in your current financial situation.
If you already have a VA loan, the program’s refinancing options give military borrowers the ability to reduce their loan’s interest rate and payments without the paperwork of income verification or an appraisal. The VA cash-out refinance loan allows you to borrow up to 100% of the equity in your home for debt consolidation or home improvement, which is significantly higher than you’d be allowed to borrow with any other government loan program.
LendingTree reviewed data from hundreds of lenders that offer 30-year fixed-rate VA refinance loans to come up with the top five lenders of 2019. Our ratings are based primarily on the interest-rate terms offered to borrowers on LendingTree over the last 12 months. Then we take into account the quality of information each lender provides on their websites. You can read up on our full methodology below.
| KS StateBank
KS StateBank was founded as Kansas State Bank of Manhattan in 1969. The bank is based in Manhattan, Kan., and has branches in Minnesota, Arizona and Missouri.
KS State Bank offered a median 30-year fixed VA refinance rate of 4.193% on the LendingTree platform.
The homepage of the bank’s website features general home loan product information under the “Personal” drop-down menu of the website. It also includes a link to a checklist of documents needed for each loan type, a glossary of mortgage terms and mortgage calculators.
There is no “Apply now” button, but there is a “Find a lender and apply today” link that takes the reader to a page where customers can choose a general application to fill out, or a list of loan officers at each of the bank’s branches to contact directly.
| HomeDirect Mortgage
HomeDirect Mortgage is a subsidiary of BOK Financial, a financial company based in Tulsa, Okla. HomeDirect Mortgage is based in Kansas City, Miss., and provides mortgage loan products in all 50 states.
HomeDirect Mortgage offered a median 30-year fixed VA refinance rate of 4.43% on the LendingTree platform.
The homepage provides a number of different informational tabs, including loan programs, VA loans, and mortgage calculators. Each drop-down provides additional details about a number of different mortgage qualifying topics.
The “Apply now” button appears by clicking on the “Get prequalified” tab at the top of each webpage, taking the consumer to a link to fill out an online application.
| James. B. Nutter & Company
James. B. Nutter & Company was founded in 1951 and is headquartered in Kansas City, Miss. The company offers mortgage loans in all 50 states.
James B. Nutter offered a median 30-year fixed VA refinance rate of 4.43% on the LendingTree platform.
The homepage features information about loan programs and types under the “Home loans” tab, with informative explanations about which loans are the best for specific lending needs. The homepage has helpful categories covering the basics of purchasing, refinancing and a very detailed section specifically covering VA loans.
While there are no mortgage calculators on the site, the informational guides and FAQs cover a wide variety of topics to aid consumers in understanding the pros and cons of the different loan types. There is an “Apply to purchase” and “Apply to refinance” tab on the homepage that is easy to find.
| NBKC Bank
NBKC Bank has the ability to fund VA and FHA loans in all 50 states. Their corporate headquarters are located in Overland Park, Kan., and they provide commercial banking products as well as mortgages.
NBKC Bank offered a median 30-year fixed VA refinance rate of 4.43% on the LendingTree platform.
The homepage has a “Home loans” button to access information about NBKC Bank’s loan programs. The consumer can choose from four options, including “Get prequalified,” which takes them to another section featuring an “Info center” tab with additional options to get more detailed information about mortgage and homebuying related topics.
This section also features mortgage calculators, homebuying tips, and other helpful articles. There is no “Apply now” button on the site, but a 1-800 number appears at the top of each page, and there is an option for a live chat in the lower left side of the web pages.
| BNC National Bank
BNC National Bank was formerly known as BNC National Bank of Minnesota and changed its name to BNC National Bank in April 2002. The company was founded in 2001 and is based in Glendale, Ariz., offering full-service banking products in addition to home loans.
BNC National Bank offered a 30-year fixed VA refinance rate of 4.327% on the LendingTree platform.
The homepage does not feature any mortgage product information or educational information. However, the BNC Blog does feature helpful mortgage related articles about homebuying and mortgage-related topics.
The “Your life” link does provide a path to another section titled “Your loans,” where a variety of financial calculators are located. These include several different mortgage payment calculators after clicking on an additional “Mortgage” tab.
No “Apply now” button was found on the site, although there was a “Contact us” option with an input screen, and phone numbers and emails to reach BNC National Bank representatives.
How we choose our “best” lenders
Our “best” winners aren’t chosen based on rate alone, but also with a unique rating developed by our editorial staff called “Online Information Quality,” or OIQ. We’ve taken extra time to review the information you can access online, including how easy it is to access loan product information and mortgage tools like mortgage calculators, and to fill out a loan application.
To determine the best 30-year fixed VA refinance lenders, we analyzed data from actual loan terms offered by lenders to borrowers on LendingTree. We chose the top five lenders by rate for the last 12 months. Then we selected for lenders that originate mortgages in at least 25 states. From that list, we gave each lender an OIQ rating based on answers to the following when accessing the lender’s main website. One point was given for each yes answer.
Is there general product information on the website?
If the website features both basic terms of the loan (30-year, 15-year, adjustable rates) and program offerings (FHA, Conventional, FHA, VA), it scores a full point.
Is there general home loan information on the website?
Borrowers can make the most informed decisions if they have additional information regarding mortgages in the form of explanation articles, FAQ sections or links to an informational blog. Sites that have additional mortgage information score an extra OIQ point.
Is the general home loan information easy to find?
If the information is available within two clicks on the homepage, it scores an extra point since a consumer will be able to get the information easily without having to search extensively through the site.
Are there any education tools (e.g., loan calculators) on the page or at least one click away from the homepage?
Mortgage calculators, home value estimators and other tools help consumers to make educated decisions, so landing pages that feature them score an additional OIQ point.
Is it easy to find the “apply now” button?
Mortgage users in the digital age want a quick online way to apply for a mortgage, so if the “Apply now” button is easy to find on the homepage, it will be easy for a consumer to apply once they’ve gotten the information they need to proceed to the next step in the mortgage.
Tips for shopping for a VA refinance mortgage
The first thing you need to decide when it comes to a 30-year VA refinance loan is what your financial goal is. If you just want to save money on a lower rate, then a VA streamline refinance, more commonly known as an interest rate reduction refinance loan or IRRRL, can be a good option.
You’ll have to prove you’ve had your current VA mortgage at least seven months, but you won’t need to provide any income documentation, and no appraisal will be required to verify the value of your home. Your loan officer will need to prove there is a net tangible benefit for you to refinance, which verifies you are saving money every month without paying an excessive amount in closing costs.
One important rule about the VA streamline refinance breakeven point: The costs must be recouped in 36 months or less, or the refinance will not pass the benefits test. The breakeven point is a measure of how many months it takes to recoup the fees you’ll pay to complete the refinance.
Calculating a breakeven is easy. First, find out what the closing costs are, focusing on the lender fees such as origination, appraisal and credit report, and the title fees. Don’t include the ongoing costs of your home like property taxes or insurance.
Once you determine the closing cost figure, divide it by the amount of savings for each loan option to calculate the number of months it will take to recoup your costs. The best option will be the one that takes the least amount of months to recoup.
If you need some cash to pay off credit cards or invest in home improvements, you’ll have borrowing power up to 100% of the value of your home. This is 15 percentage points more than an FHA refinance loan allows, giving you access to all of the equity in your home to pay off debt or make home improvements.
Here are some additional tips.
Tip 1: Know your three Cs
In the world of mortgage underwriting, the “three Cs” are credit, capacity and collateral. These three factors can result in the approval or decline of any mortgage application, so before you get started, you need to know how each of them relate to your financial situation.
In order to get an accurate rate quote on any mortgage product, you need to know your credit scores. Lenders analyze if you’ve made on-time payments, how much credit you have, how long you’ve had it and which types of credit you have.
With a VA refinance, there is no minimum credit score, although some VA-approved lenders may require at least a 620. Your mortgage payment history should reflect on-time payments, but there may be exceptions for refinancing if you paid late. The VA IRRRL program only looks at your mortgage payment history for credit purposes, so other payment histories are not taken into consideration.
Capacity is a measure of the income you earn every month compared with how much total debt you’ll have once your potential new house payment is factored in. This is more commonly referred to as your debt-to-income ratio, and is calculated by dividing your total monthly debt by your before-tax income.
Usually, your DTI will improve with a refinance since you are lowering your monthly payment.
The VA recommends a maximum DTI of 41%, however, the program does not use DTI as the final measure of capacity for approving a VA loan. Instead, lenders look at how much money is left over every month after subtracting all your debt and house maintenance costs from your after-tax income. The minimum residual income requirement varies by which part of the country you live and the size of your family.
When it comes to a refinance, the other capacity calculation important to a lender is your loan to value (LTV) ratio. This calculates the total percentage of loan you are borrowing compared to your home’s value.
VA 30-year IRRRL loans don’t calculate LTV because no appraisal is required, and you can be borrowing 100% for a cash-out refinance. You may not be eligible to borrow the maximum if your credit scores are too low, or aren’t using the cash out to improve your overall financial situation or to improve your home.
The term collateral relates to the type of property you are buying. Refinancing a condominium or manufactured home comes with different rules than buying a single-family residence, and to get an accurate rate quote, you’ll need to make sure you price your rate based on the type of property you are refinancing.
The value of your home is very important when refinancing, and is somewhat more difficult to guess because you don’t have a purchase contract to guide the appraiser’s opinion of value. Before you refinance, it’s a good idea to contact the real estate agent who helped you buy your home to provide you with a comparative market analysis (CMA), which looks at how much nearby houses similar to yours have sold for recently.
One thing to remember is the higher the LTV, usually the higher your rate will be. If your appraised value is lower than what you estimated, the costs and interest rate could go up. You’ll need to reevaluate your breakeven to make sure the refinance still makes sense.
Tip 2: Know the loan programs you qualify for
VA 30-year fixed rate refinances allow for lower credit scores and higher debt-to-income ratios. One thing to keep in mind is that you’ll be subject to a VA funding fee even when you refinance your loan, and the amount will depend on how much equity you have in your home and the purpose of the refinance.
The funding fee can be as low as 0.5% for a VA IRRRL or as high as 3.3% for a cash-out refinance, and is charged by the VA to offset the cost of the VA home loan program to taxpayers. If you have a service-related disability, you may be eligible to have the fee waived on a refinance.
The funding fee is slightly higher for military reservists and National Guard members. You’ll need to provide documentation to verify your length of service and which branch of the military you served in, or a letter from your current commanding officer confirming your continued active-duty service.
Tip 3: Get your rate quotes on the same day, in writing
Interest rates and the costs associated with them fluctuate on a daily, sometimes hourly basis. In order to get an apples-to-apples comparison, provide the same information to each lender and gather your quotes on the same day.
Let the loan officer know what you think the estimated value of your home is, and be prepared to provide your address in case the lender wants to run something an automated valuation model. This is a computerized system that does a quick analysis based on closed sales in the public records database near your address and ZIP code.
The systems are not always accurate, so don’t be too discouraged or get too excited if you see an unexpected value estimate from one of these systems. As mentioned above, your agent’s CMA will be a much better baseline for what’s happening to home values in your area.
Tip 4: Only compare the lender fees when making your decision
Loan estimates contain a lot of information about the costs associated with a mortgage, but the only items you’ll want to consider as you are refinance shopping are lender fees. These can include origination, discount, underwriting, processing, appraisals and credit reports.
Ignore costs like title fees, prepaid interest, property taxes and homeowners insurance and mortgage insurance — those fees will be the same regardless of the lender you choose. One helpful tip: Even though your mortgage company may have a preferred title company, you aren’t required to use them on a refinance, so be sure you shop around a few title companies to make sure the fees are competitive.
When it’s time to make the final decision, you’ll want to consider a few things besides the final rate and costs.
- Fast closing times: Usually the best pricing is on a 30-day lock-in rate. Make sure your lender has the ability to close your loan quickly, and if they can, be prepared to provide your documentation as quickly as possible to meet that timeline. If you are doing a cash-out refinance be prepared for a potentially longer wait for the appraisal. Appraisers are assigned randomly by the VA, and the inspections can take up seven to 15 days to complete depending on which part of the country and county you live in.
- Personalized service: Some customers still prefer a face-to-face meeting with someone, so take this into consideration if you are only talking to online lenders. It’s possible you’ll be working with multiple people during the process, so if you want one person to guide you along, you may want to choose a local bank or a real estate agent-referred lender.
- Get the lock in writing: Be sure to request your rate lock in writing. This is pretty common practice now, but until you receive confirmation of the lock, usually by email, your rate may still be subject to change as the financial markets shift.
The information in this article is accurate as of the date of publishing.
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