VA Mortgage Refinance Calculator
The remaining amount you owe on your current VA mortgage.
The interest rate for the new VA loan.
The duration of the new VA mortgage in years.
The VA funding fee for refinance loans. Varies based on service history and prior use.
Include all lender fees, title insurance, appraisals, etc.
Refinance Estimate
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Estimated Monthly Principal & Interest Payment (excluding taxes, insurance, and PMI).
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Understanding VA Mortgage Refinance
Refinancing a VA mortgage allows eligible Veterans and service members to replace their existing VA loan with a new one. This can be done to secure a lower interest rate, change the loan term, or tap into home equity. The VA offers several refinance options, with the most common being the Interest Rate Reduction Refinance Loan (IRRRL) and the VA Cash-Out Refinance.
Key Benefits of VA Refinancing:
- Lower Interest Rate: Reduce your monthly payment and save money over the life of the loan.
- Shorter Loan Term: Pay off your mortgage faster by opting for a shorter term, potentially with a higher monthly payment.
- Convert to Fixed Rate: Switch from an adjustable-rate mortgage (ARM) to a fixed-rate loan for payment stability.
- Cash-Out Refinance: Access a portion of your home's equity for other needs, such as home improvements, education, or debt consolidation.
How the VA Mortgage Refinance Calculator Works
This calculator helps you estimate your potential new monthly mortgage payment and the total cost of your refinance. It considers the following inputs:
- Current Loan Balance: This is the principal amount you currently owe on your existing VA loan.
- New Interest Rate (%): The annual interest rate offered on the new VA refinance loan.
- New Loan Term (Years): The total duration of the new loan, typically 15 or 30 years.
- VA Funding Fee (%): A one-time fee charged by the VA to help keep down costs for taxpayers and reduce the need for future Congressional appropriations. The rate varies based on your service type, how many times you've used your VA loan benefit, and whether it's a refinance (IRRRLs often have lower fees).
- Estimated Closing Costs ($): These are fees associated with obtaining a new mortgage. They can include origination fees, appraisal fees, title insurance, recording fees, etc. For IRRRLs, closing costs can often be rolled into the new loan.
The Math Behind the Calculation:
The calculator first determines the total loan amount, which includes the current loan balance, the VA funding fee (applied to the loan balance), and any closing costs you choose to finance.
Total Financed Amount = (Current Loan Balance * (1 + VA Funding Fee Rate)) + Closing Costs
Then, it calculates the estimated monthly principal and interest (P&I) payment using the standard mortgage payment formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
- M = Monthly Payment
- P = Principal Loan Amount (Total Financed Amount)
- i = Monthly Interest Rate (Annual Interest Rate / 12)
- n = Total Number of Payments (Loan Term in Years * 12)
The calculator also estimates the total interest paid over the life of the loan and the total amount paid (principal + interest).
Total Interest Paid = (Monthly Payment * Total Number of Payments) – Principal Loan Amount
Total Amount Paid = Monthly Payment * Total Number of Payments
Important Considerations for VA Refinancing:
- VA Funding Fee: While it can be financed, remember it increases your total loan amount and thus your monthly payment and total interest paid.
- Closing Costs: For IRRRLs, the VA limits the amount of closing costs that can be charged. These are often rolled into the new loan.
- Property Taxes and Homeowner's Insurance: These costs are not included in the P&I calculation but are essential parts of your total housing expense. They are often held in an escrow account managed by your lender.
- Eligibility: Ensure you still meet VA eligibility requirements for the refinance.
- Lender Fees: Different lenders may have varying fees. Shop around to compare offers.
This calculator provides an estimate to help you make informed decisions about refinancing your VA mortgage. It is recommended to consult with a qualified mortgage professional for personalized advice and accurate loan terms.