VA Streamline Refinance Loan – Interest Rate Reduction Loan (IRRL)
VA Streamline Refinance Loan – Designed to Help Vets Lower Mortgage interest Rates
Streamline Refinance Can Lower Your Current VA Mortgage Interest Rate – This Federally insured loan program was created by the Veterans Administration in order to help veterans and active duty members, who currently have VA loans, take advantage of lower mortgage interest rates.
Here are the Highlights of the VA Streamline Refinance Loan program:
- Appraisal of your home is NOT required
- Any closing costs are rolled into the new loan – You can’t receive any cash out, however
- No bank statements, job verifivation, pay stubs are needed as conventional underwriting process doe NOT apply.
- No minimum FICO (credit) Score – In the last 12 months you cannot have more than ONE 30 day late payment on your current VA mortgage
- You can SKIP 2 months of mortgage payments after you refinance .
- Energy efficiency improvements to your home can be rolled into the loan amount
VA Streamline Refinance Loan – This VA loan guaranty program, which is also referred to as IRRL (Interest Rate Reduction Loan Program), is straightforward and simple for US Veterans and active duty members to qualify for. Keep in mind, you can use the terms IRRL and VA Streamline Refinance Loan interchangeably
VA Streamline Refinance Loan – Why The Program Was Developed
- Gives veterans and active duty service men and women a fast simple process to refinance their current mortgage loan
- Gives veterans and active duty service men and women an inexpensive way to lower their mortgage bill
Why Consider a VA Streamline Refinance Loan ?
Refinance Could Lower Foreclosure Risk – If you have an (ARM)adjustable rate mortgage, your housing bill may very well INCREASE when the fixed period expires. Depending on your exact mortgage terms, which is usually anywhere from 3-5 years.
It’s not uncommon for your interest rate to jump dramatically – 2 to 5 percentage points after your ARM expires forcing you into conventional “refinance”. The results can be devastating financially as you may not be able to afford to keep your home.
You NEED to get out of an ARM and into a fixed rate mortgage! IRRL can help you accomplish this.
If your not sure you have an Adjustable Rate Mortgage , check with your mortgage company ASAP, you need to know when the adjustable period expires so you can take action and get into a fixed rate mortgage using the IRRL program.
It’s quite common that you may NOT realize you have an ARM! It could have been the way the loan was explained to you and didn’t realize the interest rate could adjust after 1 to 3 years. If that’s the case and you are Vet, it’s time to take action NOW!
Take advantage of lower interest rates – What if today’s interest rates are lower than the interest rate you are currently paying? If you simply want to reduce your monthly payment, an IRRL may drastically reduce the overall dollar amount spent on interest by lowering your interest rate.
Benefits of The IRRL – VA Streamline Refinance Loan
Keep in mind IRRL stands for – “Interest Rate Reduction Loan” program, and is a major part of your veterans benefit. The IRRL doesn’t require any income, credit or asset verification
- Almost all Vets qualify
- Out of pocket expense is ZERO – closing costs are rolled into loan
- No credit report needed
- Property is not appraised
- No need to verify income
- Reduce your monthly payment by reducing your interest rate
- Avoids potential foreclosure
- Easily transition from an ARM to Fixed rate mortgage
- Can “roll 2 payments into IRRL” allowing you to delay 2 months scheduled payment
- No out of pocket closing costs – You are allowed to add up to $6000 over the amount you owe on your loan to cover closing expenses. This will be rolled into your new loan amount.
Who is Eligible For a VA Streamline Refinance Loan?
Any Veteran or active duty military personnel that currently has a VA mortgage.
What are the Basic Qualifications for a VA Streamline Refinance Loan?
- VA to VA loan – Must be refinancing an existing VA loan
- Bad credit OK – No credit score needed – No FICO
- Collections OK – If you have any collections you can still qualify
- No Income verification OK – You do not need to prove employment
- No Appraisal OK – Your current property DOES NOT need not be appraised
Your credit score is not an issue Whether your FICO is 680 or 500 the SCORE is not THE deciding factor whether you qualify for a VA Streamline Refinance Loan.
What are the Disqualifications for a VA Streamline Refinance Loan?
- Judgements – Must be cleared before qualifying
- Liens against your property – Must be cleared before qualifying
- Late payments – You’ll be disqualified if you missed more than ONE 30 day late payment on your mortgage in the last 12 months.
What are the Fees For a Streamline Refinance Loan?
There is a .5% funding fee for using the IRRL program to refinance your home. This fee can be fully financed which means it’s “rolled into the new loan amount”.
This fee helps defer the cost of private mortgage insurance that would have been required had you taken out a conventional loan. Keep in mind, VA charges no monthly mortgage insurance premium, instead letting Vets pay a funding fee of .5%.
Does it make sense to use IRRL refinance? Consider this very extreme yet possible example…
Say your original loan amount was $200,000, terms being a 3 year ARM at an interest rate of 5.5%. So for the first 36 months you are paying about $1,335 ( Principal and interest) but after the first 36 months the rate could easily jump to 9.5% due to your income and credit history if you tried a conventional refinance. The amount you will be financing at 36 months is about $191,456, which is simply the payoff on the mortgage after 3 years. At the new 9.5% rate your monthly payment would be about $1,609, $274.00 more per month. Ouch!
With a VA refinance you will be financing the $191,456 X .5% = 957.28, or a new loan amount of $192,413 at a much lower VA approved interest rate. Probably somewhere in the low 6’s. Even at 6.5% your monthly payment would be about $1,216, so you’ld be saving a over a hundred bucks right there – IRRL is definitely a winner.
Where Can I Find a VA Streamline Refinance Loan?
Inquire With Online VA Lenders – You should contact online VA mortgage brokers. WHY? It’s quick and you’ll find the biggest selection of VA lenders online.
Remember your only inquiring FIRST – to answer any initial questions. As MANY major mortgage companies will offer the IRRL program, it is important to shop for the best interest rate, before commiting to any one lender/broker.
VA Mortgage rates are negotiable – Interest rates offered will vary between brokers. Compare between at least 3 online brokers and let them know you ARE shopping. Educate yourself !
Competition is a great equalizer – if a lender knows you are shopping and comparing terms and rates you will probably get a better deal.
Believe me, lenders want your business because these loans are guaranteed by the Federal Government – they are risk free to the lender. A mortgage broker lowering the interest rate to keep your business is common when borrowers force competition between brokers.
Summary – VA Streamline Refinance Loan
All in all, the IRRL is a SMART CHOICE if you are a Veteran or active duty member of the military looking to refinace your existing VA loan. You are able to take advantage of a reduced interest rate, inexpensively regardless of credit score and the process is pretty simple.