VA Interest Reduction Loan
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Anonymous
| We are in the process of refinancing our current VA loan. We had a 30 yr. mortgage at 6.5% and we are refinancing to a 15 yr. loan at 3.5%. It is a VA Interest Rate Reduction only. The current principal balance on our home is approximately 120K. The home was appraised at 400K. The mortgage processor sent me a Good Faith Estimate and it show an initial loan balance in the amount of 131K and closing costs at 4.5K which includes taxes and insurance. Why is the initial loan balance on the GFE over 10K higher than our current principal balance? How is this amount compiled? If anyone can help me or direct me to a website that explains this information, I'd be very grateful. I'm really confused about this process. |
Anonymous
| First it is just an estimate. Second they are including the $4500 in closing costs, third they planning on you skipping 1-2 months payments and adding the accrued interest to the mortgage balance. If you want to pay any of those out of pocket they can reduce the loan accordingly, if you ask up front. |
Anonymous
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make sure to shop around different lenders and compare their offers. We just did an IRRL and the terms and rates were quite different. just FYI. i ended up going with James B Nutter because at the time, theirs was the best I could find. (not a plug for them. I have no idea if they will turn out to be scammy in some way but so far so good). we did it with no money out of pocket up front at all, which was what i wanted
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Anonymous
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Part of it is probably related to your "payoff" amount. You can request this amount from your current lender. You tell them a future date that you will pay the mortgage off (either through a lump sum payment or a refinance), and they'll tell you what the payoff amount is. The amount is going to be higher than the current balance because interest is accruing every day. Depending on the number of days and the balance, this can add hundreds if not thousands of dollars more.
They probably also are requesting extra money to establish a new escrow account. None of this has anything to do with it being a VA loan. This would happen with any refinance. |