One of the quickest, yet rewarding, type of refinance for veterans who already have a VA loan is the VA streamline refinance, also known as the Interest Rate Reduction Refinancing Loan (IRRRL). This VA refinance is a great way to save money when mortgage rates are low. Below are the important facts to know about the VA refinance (IRRRL):
What Is a VA Refinance Loan?
For those homeowners who already have a VA loan, there is the opportunity to refinance to a lower rate, lower payment or shorter term through a VA IRRRL. This refinance can be done quickly and easily since it does not require much in the area of documentation. Typically, there are no paystubs, no W2s, no bank statements and no appraisal required. Since there is no appraisal required, there is no LTV limit and those who are still underwater can refinance because value is not an issue (lenders can have overlays that require an estimated value).
Am I Eligible for a VA Streamline Refinance (IRRRL)?
There are certain conditions that must be met to be eligibility for an IRRRL:
– You must have an existing VA loan.
– The current VA loan must be in good standing – on time payments for the past year with no more than one payment that was 30 or more days late within that time period.
– The VA refinance must result in a better financial position for the borrower. The new mortgage payment must be lower than the current monthly mortgage payments except:
– when the refinance is from an adjustable rate mortgage to a fixed rate mortgage.
– when the refinance is for a shorter term.
– when energy efficient improvements are added to the mortgage balance.
What are Some of the Benefits of a VA Refinance?
While there are financial benefits with a VA refinance,there are also other reasons to use the IRRRL for refinancing:
– There is no need to prove VA eligibility again since the VA already has your COE.
– The required funding fee is lower than the original fee.
– There is no monthly mortgage insurance required
– Closing costs can be added to the loan. Ver often there are little or no closing costs involved with a VA IRRRL.
– You must only certify that you have previously occupied the home that is being refinanced. This means that this home can actually be a second home or investment property at the time of refinance.
– An IRRRL does not use additional entitlement, if any is available.
– There is a minimum of credit underwriting required with a VA refinance.
– No appraisal is necessary; however, lenders may require one which depends on who is servicing the loan.
– The borrower can use any VA lender for a VA refinance. Since VA mortgage rates are very competitive, shopping around could greatly benefit the borrower.
The VA IRRRL is a streamlined refinance that does not allow for cash out except for energy efficient improvements. This streamlined process is in place because VA has already guaranteed the loan in the event of a default. Knowing your payment history, they are reassured that you will continue to make your monthly mortgage payments on time. The application and closing process for the IRRRL is easier, however, the results are so much more beneficial to the VA homeowner.
Feel free at any time to contact me for more information about the VA Streamline Refinance – IRRRL and how you can benefit from refinancing.
My loan process was very easy and quick. Not to mention a great loan rate. I couldn't be happier!
Capt Sam T. - US Army
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