Because interest rates on Veterans Administration-guaranteed loans are at their lowest level since January 1987, the Department of Veterans Affairs is introducing an outreach program to encourage veterans and lenders to work together to refinance VA-guaranteed home loans with high interest rates.
VA officials will notify lenders of those veterans' loans that are at significantly higher interest rates than VA's current 9 percent rate. The lenders will be asked to contact veteran homeowners to refinance at the lower interest rate.The agency advises veterans to refinance loans with interest rates that are 2 percentage points or more higher than the current VA rate. For smaller differences in interest rates, the cost of refinancing can eat up the savings.
VA officials said the savings to veterans is substantial. For example, a $70,000 30-year loan at 11 percent interest has a monthly payment of $666.63 (principal and interest). If the loan interest is lowered to 9 percent, the monthly payment would decrease by $109.39 and over a 30-year period the savings would be more than $37,000.