The VA loan program offers veterans, active military and other specific groups the opportunity to purchase a home with 100% financing. However, the program does not end there, but continues to provide benefits to homeowners, one of which is the VA Streamline Refinance program or IRRRL.
IRRRL stands for the Interest Rate Reduction Refinance Loan and is the VA program’s most commonly used refinance product. It is also known as a VA to VA loan because it is only available for those who already have an existing VA loan and is used to refinance the current mortgage to a lower rate, shorter term or adjustable to fixed rate. Just like the original VA loan, the IRRRL is designed to make it easier for VA mortgage holders to save money.
Requirements For Obtaining the VA IRRRL
– The current loan must be a VA loan.
– The mortgage must not have more than one 30 day late payment within the past year.
– The borrower cannot receive any cash out from the refinance.
– The borrower must certify that they previously occupied the residence at some point in time.
– The monthly mortgage payment for the IRRRL must be lower than the payment for the original VA loan. This requirement is not mandatory when refinancing from an adjustable rate mortgage to a fixed rate loan, or when reducing the term of the mortgage.
– If there is a second mortgage, the lien holder must subordinate so that the VA loan is the first mortgage.
Benefits of the IRRRL:
– There is much less documentation and very little paperwork required with the VA IRRRL.
– The closing costs for the IRRRL can be added to the loan amount which means that the borrower can refinance with no out of pocket expenses. In some cases, the borrower may choose for lender paid closing costs which usually is done through a slightly higher mortgage rate.
– A new Certificate of Eligibility is not required since it is already on file for the original VA loan.
– The borrowers can use any lender that offers VA loans; the IRRRL does not have to be done with the original lender.
– There is minimal credit underwriting with an IRRL. Income verification is generally not needed.
– VA does not require an appraisal with the IRRRL. However, lenders may require one depending on many factors such as who the loan is serviced by or if an AVM (automated/online appraisal estimate) can be obtained to support estimated value.
– Since the borrower must only certify that they have previously lived in the home, the IRRRL can be used for property that the borrower has now rented as investment property.
– The borrower may be able to finance up to $6,000 of energy efficient home improvements when refinancing with the IRRRL.
The VA IRRRL (streamline refinance) is another great VA mortgage product that continues to help the military community. It does not take long to apply, process and close this type of loan which can inevitably leads to a substantial savings for the 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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