VA Refinance Loan Requirements: The net tangible benefit test (2 of 3)

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The NTB—or net tangible benefit—test exists because the VA wants to ensure the benefit you get from refinancing is sufficient enough to justify the closing costs that come with creating a new loan.

Both VA IRRRLs and VA cash-out refinances each have their own specific list of approved net tangible benefits. In order to be able to qualify for the refinance, you must meet at least ONE of these conditions for the type of refinance you want.

For IRRRLs, the list of approved net tangible benefits includes*:

-Lowering interest rate by at least 0.5% for fixed rate to fixed rate loans
-Lowering interest rate by at least 2% for fixed rate to adjustable rate loans
-Moving from an ARM to a fixed rate loan (exempt from rate reduction)
-Moving from an ARM to another ARM (exempt from rate reduction)

For cash-out refis, the approved NTBs are:

-Increasing residual income
-Decreasing the interest rate
-Decreasing the mortgage term
-Decreasing the loan payment amount
-Eliminating mortgage insurance
-Replacing a construction (or other interim) loan
-Decreasing the loan amount to 90% or less of the appraised value
-Moving from an ARM to a fixed rate loan

*Note: A lower term, on its own, is not enough for an IRRRL to pass the NTB test. It is, however, enough for a cash-out refinance.

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This video is not intended for residents or homeowners in the states of WA, NY or MA.

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Видео VA Refinance Loan Requirements: The net tangible benefit test (2 of 3) канала Low VA Rates