How to Refinance a Low Fixed Rate Government Backed Loan

Government loans can be refinanced.

Government-backed loans include Federal Housing Administration (FHA) mortgages, Veterans Affairs (VA) mortgages and federal student loans. All of these loans often come with low, initial interest rates. They all, too, can be refinanced. The process can range from relatively simple to rather complex, depending on the loan type. The resulting loan must be beneficial.

Things You'll Need

• Existing government loan paperwork
• Income documents (pay stubs, W2s)

Instructions

1. Check your credit first (See Resources) This will take you to the federally mandated website that offers all citizens a free copy of a credit report. You will need to pay for your credit score, though. Credit scores range from 300 to 850. Excellent scores are above 720; bad scores are below 600.

2. Check your eligibility for a Streamline Refinance, if you have an FHA-insured mortgage, or Interest Rate Reduction Refinancing Loan (IRRRL) if you have a VA mortgage. In both cases, you must use the property as your principal balance. In addition, you must be current on the loan.

3. Find a FHA-approved lender or VA-approved lender to apply for a Streamline or IRRRL (See Resources). Both of these programs are fast. Lenders use previous credit scores, previously verified income and old appraisals to approve these loans. They are often approved in less than a week.

4. Double-check the final Streamline or IRRRL paperwork before signing. You cannot take cash out of these refinances. The resulting interest rate must be lower than your existing rate.

Refinancing Government-Backed Student Loan

1. Log on to the site (See Resources). This is the government's student loan refinancing website. You will need your Social Security Number and, possibly, your student loan account number(s).

2. Fill out the application online or print out the PDF. You will need your name, address, Social Security number, account numbers and balances for all federal student loans. Review the application for accuracy. Electronically or physically sign the document. Applying online is faster.

3. Submit the application. You will need to create an electronic PIN. This will let you access your application and check the status. However, you may need to wait as long as seven days to receive a response from the federal government.

References

• HUD: Streamline Your Mortgage
• VA: IRRRL Refinancing
• Federal Direct Consolidation Loans: Welcome Applicants!

Resources

• Annual Credit Report
• FHA: Lender List