When new PCS orders arrive, the immediate focus is usually on the destination. However, service members who own a home at their current duty station face an important financial decision: sell the property, or keep it as a rental? If you choose to hold onto the home, refinancing your current mortgage before you relocate can be a highly strategic move to optimize your long-term financial portfolio and improve your cash flow.
Refinancing before a PCS is often utilized to lower the monthly mortgage payment, making the property more profitable as a rental. For those with an existing VA loan, the VA Interest Rate Reduction Refinance Loan (IRRRL ) offers a streamlined process to secure a lower interest rate with minimal documentation and no appraisal requirement . Alternatively, a cash-out refinance can allow you to tap into your home’s equity, providing the necessary capital for a down payment on a new home at your next duty station or funding repairs to make the current property rent-ready.
The VA IRRRL is specifically designed for service members who want to refinance an existing VA loan to a lower interest rate. The process is streamlined compared to a traditional refinance, with reduced paperwork and no appraisal required. If interest rates have dropped since you purchased your home, an IRRRL can significantly reduce your monthly payment.
For example, if you have a $300,000 VA loan at 5.5% interest, refinancing to 4.5% could reduce your monthly payment by approximately $250. Over a year, that’s $3,000 in savings—money that can be redirected toward building your rental property business or funding your next home purchase.
A cash-out refinance allows you to borrow against your home’s equity. If your home has appreciated significantly, you can refinance for more than you owe and receive the difference in cash. This capital can be used for:
Down Payment on New Home: Use the cash to fund a down payment at your next duty station.
Rental Property Preparation: Make repairs, upgrades, or improvements to make the property more attractive to renters.
Emergency Fund: Build a financial cushion for unexpected rental property expenses.
Investment Capital: Deploy the capital into other investment opportunities.
Before refinancing, consider these factors:
Current Interest Rate vs. Market Rate: Will refinancing save you money over the long term?
Closing Costs: Refinancing involves closing costs. Ensure the savings justify the expense.
Time Until Your Move: If you’re moving in a few months, refinancing may not make sense.
Rental Market: Research the rental market at your current location. Can you charge enough rent to cover the mortgage payment and generate positive cash flow?
Property Condition: Will the property attract quality tenants, or will it require significant repairs?
Determining whether refinancing is the right move requires a careful analysis of your current interest rate, rental market projections, and future housing goals. East Coast Capital offers expert guidance to help military homeowners navigate these complex decisions. Our nationwide network of Mortgage Loan Officers will review your specific financial situation and explain how “Mortgage Lending, Made Personal” applies to your investment strategy.
We can help you structure your refinance to support your broader PCS objectives. To discuss your refinancing options, contact us today.
Ready to optimize your rental property? Schedule a refinance consultation with our military lending experts.
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Our MISSION is to educate and assist veterans and their families on their path to Homeownership; while always serving and advocating for our military community.
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