What to expect to pay for a VA refinance

Question

I have been receiving letters in the mail to refinance my current VA loan. After about the fifth letter I caved and called the lender, Low VA Rates. I called assuming I would catch them right away in a gimmick. But, it seemed to be pretty legit. However, after filling out the preliminary paperwork I watched all the fees add up. Now I know there is a 2% VA fee, but now I am being told there is additional fee associated to the VA loan of .5%. My $121,500 current balance is subject to raise to $127,000 with a promise that my current lender will be mailing a check for $1500 to $2000 for escrow. Does this sound right? $5500 seems like a lot.

Thanks for any advice.

Dustin Little · Answer

Thank you for the information, it was exactly what I was looking for.

Albert Bui · Answer

VA to VA refinances assuming you have 6 months of payments since your last loan only has a .50% VA funding fee, its reduced for VA IRRRL's (interest rate reduction refi loan's).

If they were to explain correctly all thats involved it would probably be a smoother process but price based lenders like to reel you in first then throw the kitchen sink at you later.

The 2.15% is first Use VA funding fee, VA IRRRL's is .50% for refi's, second use VA is 3.3% and can be less if you put some money down.

You can bring down the VAFF (VA funding fee) with additional down payment.

at 5% down its 1.5% VA FF instead of 3.3% on second use or 2.15% on first use

at 10% down its 1.25% VA FF instead of 3.3% on second use or 2.15% on first use

Let me know if you have any questions about VA

Albert Bui · Answer

when your current loan gets paid off the lender should explain to you that your going to get a refund for whatever is in your current impound account because on the new refinanced loan you'll already be setting up a new "impound account," with 2-3 months of taxes and insurance.

By law the prior/current lender must refund your escrow impound account, and perhaps this is what they are talking about when they say you're going to get back 1500-2000.