VA Loan Seasoning Period and Refinancing Options

The VA loan seasoning period can be a bit of a challenge for homebuyers who need to refinance their mortgage. This 4-year rule requires the borrower to have had the original loan for at least 4 years before refinancing.

The good news is that there are some exceptions to this rule, including cash-out refinances and interest rate reduction refinances. However, these exceptions come with their own set of requirements and restrictions.

One key thing to note is that the VA loan seasoning period applies to all types of VA loans, including VA home loans, VA cash-out refinances, and VA interest rate reduction refinances. This means that even if you're looking to refinance your VA loan to a lower interest rate, you'll still need to meet the 4-year seasoning requirement.

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The VA loan seasoning period is a crucial aspect of refinancing a VA loan. It requires the borrower to have made at least 6 consecutive monthly payments on the loan being refinanced.

For VA IRRRL and Cash-out refinances, the seasoning requirements are specific. The note date of the new refinance mortgage must be on or after the later of the date on which the borrower has made at least six consecutive monthly payments on the loan being refinanced and the date that is 210 days after the first payment due date of the loan being refinanced.

To identify if the original note was modified, it's essential to review mortgage payment histories carefully. Look for special remarks on the credit report, such as "Impacted by COVID-19" or "Deferred." Also, check if the current mortgage balance is greater than the original loan balance or doesn't align with the amortization schedule.

For loans underwritten by Newrez, the underwriter will require a copy of the original note along with the most recent mortgage statement. This ensures that the loan meets the seasoning requirements.

Here's a summary of the VA loan seasoning period requirements:

Note that these requirements do not apply to One-time Close Construction to Permanent loan modifications. Additionally, Ginnie Mae Seasoning uses the note date as the benchmark for measuring the seasoning period, which is on or after the later of 210 days after the 1st payment due date and 6 monthly payments have been made.

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The seasoning period for VA loan refinancing is based on the original terms of the Note, unless the original Note was modified. A modification is a permanent change to the terms of the original Note.

The seasoning requirements for VA IRRRL and Cash-out Refinance transactions are subject to specific rules. The borrower must have made at least six consecutive monthly payments on the loan being refinanced.

You can't pre-pay the current loan to meet the requirement. For the refinance of a loan that has been modified, the Note date of the new refinance mortgage must be on or after the later of the modification date or the original Note date.

To identify if a loan has been modified, review the credit report for special remarks, such as “Impacted by COVID-19” or “Deferred”. The current mortgage balance may be greater than the original loan balance or not align with the amortization schedule.

If this caught your attention, see: Loan Seasoning Period

Request and review a copy of the original Note and compare it to a recent mortgage statement to confirm consistency of the interest rate, payment amount, and maturity date between the two documents. Review pay off statements or mortgage statements for deferred or past due interest amounts or fees.

Here are some best practices to help identify if the current mortgage being paid off may have been modified:

Newrez LLC requires a copy of the original Note and the most recent mortgage statement of the loan being refinanced for all VA refinance transactions. If the original Note is not available, reasonable alternatives can be considered to validate the loan being paid off was not subject to a recent modification.

If you're considering a VA loan refinance, it's essential to understand the seasoning requirements. A modification to the original note is a permanent change to the terms, whereas a forbearance is a temporary change that follows separate guidelines.

Borrowers must have made at least 6 consecutive monthly payments on the loan being refinanced, and the new refinance mortgage must be on or after the later of the original note date or the date of the modification.

If the original note was modified, the seasoning requirements for VA IRRRL and Cash-out refinances are subject to specific requirements. You can identify if the original note was modified by reviewing the credit report for special remarks or the current mortgage balance.

Here are some practices to help identify if the original note was modified:

For loans underwritten by Newrez, the underwriter will require a copy of the original note along with the most recent mortgage statement.