Advertisements for VA loans are everywhere. You hear radio ads, TV commercials, and if you have a VA loan already, your mailbox gets filled every week with solicitations. If rates click down just a notch, there’s a massive pile of mail screaming for your attention! Is this stuff for real? There’s just an avalanche of it with bold claims of “lower rates.” Why does it seem as if having a VA loan makes you a target for solicitors? Where do these people who call you get your number from? Should you respond to any of these offers?
Refinancing, by definition, is simply replacing old financing with new financing (a new mortgage) because the new terms are more favorable to you. In the money game, it’s the ultimate do-over, a second (or third or fourth…) chance to take advantage of a new opportunity. Homeowners with VA home loans consider refinancing for a variety of reasons, including to obtain a better interest rate, to reduce monthly payments, to consolidate debts by paying off credit cards, or to free-up cash, often for home improvements. There are four reasons to refinance:
Homeowners who purchase a home using their VA Home Loan Benefit often don’t understand the compelling reasons to refinance. They may be skeptical of all the solicitations. Or they may have had a bad experience getting their purchase loan. Or they maintain a stubborn stance because they simply don’t want to “start all over again” with a new loan because their goal is to pay off the debt, pure and simple. This is the biggest mistake. There are a host of reasons creating resistance when it comes to refinancing and preventing our men and women who serve from taking advantage of a bona fide, legitimate opportunity to achieve better terms on a new loan. This is especially true as it pertains to a “fixed rate to fixed rate” refinance.
It’s very common for a buyer to purchase a property with a fixed rate and then come up with a list of objections as to why they will not refinance to a lower rate. Unfortunately, many of these objections are “self-invented myths” that prevent our VA borrowers from improving their financial situation. Often the improvements can be life changing with respect to properly managing their finances.
This situation is very familiar to us at So Cal VA Homes. We have tracked the data and seen the evidence. There exists a group of about 5000 home owners with VA loans across the state of California who bought their homes between 2007 and July of 2011. This specific group of VA borrowers all have the same original financing. They still have the same purchase loan that helped them buy the house. During that time, 30 year fixed rates averaged about 5.50%. Since that time frame, rates dropped to as low as 3.00%. For the years between 2011 – 2015, “no points, no fees” refinance opportunities existed at 3.75%. There has been more than enough opportunities for at least some of those 5000 VA borrowers to take advantage of lower rates, yet they don’t. We’re certain it’s not a matter of these homeowners qualifying to get approved for a better loan. They just are not taking action. These home owners with VA loans could truly benefit from a new loan with a much lower rate, without raising their loan balance or incurring any closing costs. The opportunity is actually far MORE compelling than just a lower rate achieved without incurring any costs at all. And yet, over the years, this is what we hear from clients when they initially call:
As Seen on ABC 10 5:00 O’Clock News
Sgt. Will Bauer (U.S.M.C.), Foothill Ranch, CA
As Seen On ABC 10 News
U.S. Army Veteran Billy Mayberry and Debbie Mayberry, Quartz Hill, CA
