We think you’re on the right track! With a primary mortgage of 6.875%, now is a great time to look at refinancing if you intend on staying in your home for a few years. With a VA Interest Rate Reduction Refinancing Loan, you should be able to minimize the cost to refinance. The only mandatory cost with an IRRRL is a half of percent funding fee. Because interest rates and costs can vary from lender to lender (even with a VA loan), we recommend you shop and compare.
It’s important to compare "apples to apples" when looking at various mortgage options. In other words, make sure you’re looking at loans of the same type, term and discount points (e.g., 30-year fixed with zero discount points) when you’re comparing two lenders. In your question you noted that you were offered 4.25% but saw 3.5% on a website. It may be that the 3.5% required discount points (this means you are required to pay or have rolled into your loan one percent of the loan for each discount point), whereas the 4.25% did not require any points. Your timing is good so shop smart. If you’re interested in talking with our mortgage folks, give them a call at 877-699-2654.