VA Streamline (IRRRL)
Veterans who have existing VA loans may be curious about or even interested in obtaining veteran home loan refinancing with a VA IRRRL loan. There are quite a few benefits to consider when securing this type of loan, but it is important to gather all the facts before making your final decision.
What Is the VA IRRRL Streamline Mortgage?
The VA IRRRL Program is sometimes referred to as the VA streamline refinance loan. It is called a streamline refinance because it doesn’t have the stringent qualification and approval process other types of loans require. Even traditional VA loans.
This alone saves borrowers a lot of time, energy, paperwork, red tape, and expense. The loans may be issued by any lender who has VA approval and is guaranteed by the federal government.
While the government officially refers to the loan as an interest rate reduction refinance loan, some people refer to it as a VA-to-VA loan as well. There are some things borrowers need to know when considering whether the VA IRRRL refinance option is the right choice for their needs.
- First, the VA does not require an appraisal for the loan or a credit underwriting package. However, the actual lender of the veterans home loan refinance mortgage may require these things.
- Second, while borrowers are not required to use the lender that financed their existing VA loans, we can choose the investor that’s best suited for you.
- Third, most VA borrowers must pay a 0.5 percent funding fee associated with the veterans home loan refinance mortgage. However, veterans who have certain service-related disabilities and other qualifying applicants may be eligible for this fee to be waived.
Finally, while it is not permissible to receive cash out from the refinance VA home loan, there is one exception allowing borrowers to receive up to $6,000 to make energy efficient improvements to the home.
What does the VA IRRRL Streamline Refinance Program Offer?
One thing that hasn’t been discussed with the VA IRRRL Streamline program is that it allows borrowers to adjust the terms of their loans in meaningful and significant ways. For instance, some borrowers may opt to switch to a 15-year term rather than a 30-year term.
For those who can afford this option, the lower interest rates offset some of the increased mortgage expense while ensuring that the home will ultimately cost considerably less.
Another, more common option, borrowers consider, is making the switch from an adjustable rate mortgage (ARM) to a fixed rate mortgage. This offers greater long-term security and makes it easier to plan for future financial investments. One caveat, though, is that it may come at the cost of a higher interest rate. It’s important for buyers to carefully consider if it’s the right choice for them to move to a fixed rate loan from an adjustable rate mortgage and when the right time to do so might be.
What are the Benefits of the VA IIRRL Streamline Program?
The ease of application is perhaps the biggest benefit of the VA streamline refinance process. It makes people far more likely to take advantage of the program and allows people to refinance their mortgages for more attractive interest rates and terms. These are some of the benefits that make applying for the VA IRRRL program easier and more attractive to borrowers:
- No W2s or pay stubs required.
- No appraisal necessary.
- No equity and low equity homes are eligible – even those that are currently underwater.
- Closings costs may be wrapped into the loan. This means borrowers are required to pay nothing out of pocket.
- Bank statements aren’t necessary.
- Borrowers may enjoy better terms and interest rates.
Obviously, the biggest benefit borrowers enjoy is the ability to purchase their homes for more favorable terms and interest rates. Since interest rates affect how much borrowers ultimately pay for their homes, it allows them to spend less on their homes than continuing with higher interest rates would allow.
What Are the Requirements for a VA Interest Rate Reduction Refinance Loan?
Perhaps the biggest requirement borrowers need to be aware of for the VA IRRRL program is that the existing home loan must be a VA loan. The program is only available as an opportunity to refinance VA home loan mortgages and does not work with other types of loans, including:
This means you’ve already met the eligibility requirements to receive your initial VA loan and do not need to go through the entire qualification process again to qualify for the VA IRRRL Streamline Mortgage.
One interesting point of fact about the refinance VA home loan is that you no longer must occupy the home or intend to occupy the loan to receive the financing. You only need to certify that you previously occupied the home in question to qualify for the loan.
Who Benefits Most from a VA IRRRL refinance Loan?
Veteran home loan refinancing through the VA IRRRL loan program offers benefits to many veterans. That doesn’t mean that all veterans benefit equally from this type of loan. For instance, those who have adjustable rate mortgages with currently low-interest rates might see their interest payments increase rather than decrease when participating in the VA IRRRL streamline refinance program.
Additionally, veterans who have significant amounts of equity in their homes may find other loan options more attractive. The difference involves long and short-term goals. For those who need the promise of lower monthly payments, better mortgage terms, and do not have a great deal of money to invest getting their homes ready for inspections and appraisals, the VA IRRRL loan offers opportunities to avoid those expenses along with the expense of a down payment and closing costs.
The VA Streamline loan option is an attractive option for many borrowers and provides benefits to veterans and their families that are immeasurable. Each individual borrower will have to determine if this is the best choice for his or her current needs and long-term financial goals.
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