VA Interest Rate Reduction Refinance Mortgage Guidelines

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VA Interest Rate Reduction Refinance Loan (VA-IRRL)

VA Interest Rate Reduction Refinance Mortgage Guidelines

This BLOG On VA Interest Rate Reduction Refinance Mortgage Guidelines Was UPDATED On January 1st, 2019

VA IRRL is a mortgage refinancing program which is available for existing home owners who have bought their home with VA mortgages.

  • This program is commonly referred as VA Streamline Refinance
  • This program makes home refinancing much simpler by eliminating the need for a lot of documentation that is usually required by a lender
  • Requirements that are not needed for an IRRL refinance include income verification, employment verification, verification of bank accounts and credit score, and a home appraisal

What Is VA Interest Rate Reduction Refinance Mortgage

What Is VA Streamline Refinance loan? 

The loan program which is specifically designed for veterans is known as VA loan program

  • Any VA-approved lender can approve and issue VA loans and these loans and federal government guarantees the safety of these loans
  • VA loans are significant because they make home purchasing much simpler and easy for a veteran
  • Veterans who fulfilled the eligibility criteria of required credit score and income can buy a home with no or very low down payment

Also, VA loans have very flexible requirements, very low mortgage interest rates and since they are guaranteed by the government itself hence there is no need of Private Mortgage Insurance (PMI). 

VA Interest Rate Reduction Refinance Mortgage Requirements

A veteran must have served for at least 181 days during peace times, served for at least 90 days during war time, or remain in service for 6 years in National Guards or as a Reserve in order to qualify for VA mortgage loan.

  • People may also get qualify for VA loan as the spouse of an active duty person who lost his live while remaining in service for his country
  • The VA Streamline Refinance is a loan program which is available through the VA Loan Guarantee program
  • VA Streamline Refinance is officially referred as an Interest Rate Reduction Refinance Loan (IRRRL) by the government, it is also known as VA-to-VA Loan
  • Almost all veterans who are on active duty or honorably discharged service members can obtain VA mortgage or streamline refinance loan

VA Interest Rate Reduction Refinance Is Fast Track Refinance Loan Program

VA Streamline Refinance Loan: 

  • VA Streamline Refinance also referred as IRRRL (Interest Rate Reduction Refinance Loan)
  • The IRRRL enables you to refinance the interest rate of your present mortgage to a lower interest rate than you are paying currently
  • The IRRRL is very popular because of its luxury of usage
  • Once you got approval for your initial VA mortgage loan, it is simpler for you to lower your interest rates and increase your savings

A mortgage lender or a loan officer who have expertise in VA loans may able to complete the loan procedure almost within one month in most cases. 

Closing Costs On IRRRL

VA closing costs can also be adjusting into the cost of the loan; it allows the veteran to refinance their VA loan without any special payment which burdens their pockets. Lenders might even take the burden of the cost in return for higher interest rate on your loan. 

Borrowers must fulfill the following requirements in order to qualify for VA streamline loan. 

  • no more than a single 30-day late loan payment in the last year on your current mortgage
  • Your new once-a-month payment for the IRRRL must be lesser than the former loan’s monthly payment (this situation is not applicable if you refinance an ARM to a fixed rate loan) 
  • must not obtain any cash out from the IRRRL
  • must certify that you formerly owned the property
  • must have formerly utilized your eligibility for the VA loan on the property you aim to refinance

VA Interest Rate Reduction Refinance Versus Cash-Out Refinance

The VA Cash-Out Refinance Loan: 

VA cash-out refinance loan is the secondary type of VA refinance loan. This loan type allows the borrowers to refinance their VA loan or a Conventional loan into lower interest rate along with taking cash as well from the value of the house. 

Your current mortgage loan is replaced by the VA Cash-Out refinance loan. It is often confused by functioning like a home equity but that is not the case. A qualified VA cash out refinance borrower can refinance, in some cases, up to 100% of their home’s value. 

VA cash-out refinance loan is available in several forms like USDA, FHA or conventional loan. Generally, Veterans opt for VA cash-out instead of any other types of loan because there is extended duration to pay off the loan. Also, this type of refinance loan has lower interest rates. 

Like VA streamline refinance loan, the house must be the primary residence of the owner in VA cash out refinance loan. Although there is time duration being specified that you must have owned your house but you must have enough equity to become eligible and qualify for the loan. 

Frequently Asked Questions related to VA Streamline Refinance

For a Streamline Refinance is there a Certificate of Eligibility (COE) requirement? 

Since you have already used your Certificate of Eligibility to qualify for the first time for VA loan, it is not required to become eligible for streamline refinance of your current VA mortgage loan. 

Does the mortgage interest rates for VA loan types control by VA? 

No, VA does not control the interest rate. However, VA provides an easy and simple process for veterans to get loan, the interest rates for VA mortgage are set by the lenders or banks who buy and sell mortgages.

Is it necessary to use my present loan lender to refinance my VA loan? 

No, the only thing which is required is that your lender is VA approved. It will be more beneficial if you look around for various lenders and then choose the one which gives you the best deal on your loan specially on interest rates. 

Will there be another credit check and appraisal process when refinancing? 

Since you have already been approved for a loan there is no need for another credit check or appraisal process, at least from the VA. Although, many loan lenders ask for an another credit check and appraisal to ensure that your still financially strong enough to pay for your loan and the value of the house is still higher than the maximum loan amount which they are giving you. 

To succeed for a Streamline Refinance loan, Do I have to be entitled for an enhanced interest rate? 

There are certain conditions and if you meet them you don’t need to entitled for an enhanced interest rate. If you are moving from one fixed mortgage to another then VA requires your IRRRL to be of lower interest rate, but if you are going from an (ARM)adjustable rate mortgage to fixed mortgage rate, the VA will permit you to go for the higher interest rate. 

Is there any chance of getting cash-in-hand at the closing of my VA Streamline Refinance? 

Yes, you can get around $6000 as cash-in-hand at the time of closing of your IRRRL. However, this money must be used for the improvements in house like energy-efficiency improvements, and must be a reimbursement for improvements which are being made within 90 days before closing. Some borrowers of VA loan might also get a cash disbursement of “OLD” escrow funds. 

Maximum permissible VA IRRRL loan limit? 

There is no maximum permissible limit on the size of the VA loan. Bit, a VA streamline Refinance will be restricted to the current loan balance as well as the accrued late fee and late charges. Also, the typical loan costs and cost of the energy efficiency improvements. 

change the borrower-of-record with a VA Streamline Refinance? 

Generally, the borrowers are obliged on original or initial VA loan must have same as borrowers obliged on refinance. However, it is not possible every time. For example, veterans and his/her spouse are obliged on a current VA loan. 

IRRRL can be possible during all of the following situations: Veteran and different spouse; Divorced veteran alone, an IRRRL is not available for divorced spouse alone, or a different spouse alone. 

VA Streamline Refinance can be used for an investment property? 

Yes, but you must certify that the property you have occupied in your previous VA loan is your primary home. In this case the property does not necessarily have to be your primary place to live. 

If you have been denied a home loan or have any questions about real estate or mortgage please contact the author, Gustan Cho Associates at 262-716-8151 or text us for faster response.  Or email us at gcho@loancabin.com.

This BLOG On VA Interest Rate Reduction Refinance Was UPDATED On January 1st, 2019

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