If you’re thinking about refinancing your mortgage and you currently have a VA loan, then a VA IRRRL Streamline is the best place to start.
VA IRRRL stands for “Interest Rate Reduction Refinance Loan” and is specially designed to help our veterans and service members stay in the lows interest rate and payment mortgage available.
A VA IRRRL is a unique loan program for homeowners with an existing VA loan. This “low-doc” refinance program allows you to quickly and easily refinance your current FHA mortgage without having to verify your income, employment, or credit and often does not require a home appraisal.
VA refinance rates are traditionally some of the lowest interest rates on the market.
VA loans also often have low closing costs, most of which can be rolled into the new mortgage refinance, reducing upfront refinancing costs.
How a VA IRRRL Refinance Works
In many ways, a VA IRRRL is like any other mortgage refinance. You can select a 30-year, 20-year or 15-year mortgage. The key advantages to a VA IRRRL over a conventional refinance are the streamlined or low documentation requirements and exceptionally low-interest rates.
Here are some of the benefits of a VA IRRRL Refinance:
- Limited documentation requirements
- Low interest rates
- An appraisal is often not required
- May be able to refinance with little or no equity
- You might be able to refinance with low or no closing costs
- No credit, income, or employment verification
- Available to most veterans and active duty service members – all branches including many Reserve and National Guard members
A VA Streamline program can be extremely appealing if you are looking to take advantage of historically low interest rates and lower your monthly payment. With little to no paperwork, you can swap out your higher interest rate VA loan for a better rate and payment.
Are you eligible for a VA IRRRL Refinance?
Despite all the simplicity of the VA IRRRL Refinance, there are some qualifying standards for this select type of loan.
Here are a few things that you will need to show to qualify:
- You are current on payments with no more than one 30-day late payment within the last year
- The new rate and monthly payment for the VA IRRRL must be lower than the previous loan’s monthly payment. The only exception is if you are refinancing from an adjustable-rate mortgage to a fixed-rate mortgage
- You can not receive any cash-out from the VA IRRRL
- You must certify that you currently or previously occupied the property
- You must have previously used your VA Loan eligibility on the property you are refinancing
If you’re a veteran or service member and haven’t refinanced in the last year, you could be a brief call away from a much lower interest rate and monthly payment.
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VA Loan Programs
If you are currently serving in the military with a chance of relocating in the next few years, the flexibility of an adjustable-rate mortgage (ARM) could be the right option for you. ARMs offer lower introductory interest rates that can change after the initial fixed-rate period. Depending on market fluctuations after this initial fixed-rate period, your monthly payments could vary due to rates increasing or decreasing.
Fixed-rate mortgages protect you against rising rates since the interest rate remains the same for the loan’s entire term. You can select a 30-, 20- or 15-year loan term. The main difference is that the 15-year option has higher monthly payments, which means you are building home equity faster. Keep in mind you can use equity as a down payment for your next home or a future cash-out refinance. If you plan on staying in your home for a longer time frame, a fixed-rate mortgage could be the right solution for you.
If you’re already a homeowner, a cash-out refinance may help you pay for major expenses like college tuition, debt, or home improvements. This option allows you to take cash out of your home equity by replacing your current mortgage with a new loan that is more than the amount owed. You can also refinance a non-VA loan into a VA loan with a cash-out refinance.
Interest Rate Reduction Refinance Loan
An interest rate reduction refinance loan (IRRRL) may help lower your interest rate and reduce your monthly payments by refinancing your existing VA loan. You can also refinance an adjustable-rate mortgage (ARM) into a fixed-rate mortgage with this option. However, you cannot receive cash from loan proceeds with an IRRRL.