What is a VA IRRRL streamline refinance?

VA loans are designed primarily for veterans. Since they are a unique loan program, they are guaranteed by the federal government and issued by pre-approved lenders. Within the umbrella of VA loans, the streamline refinance is undoubtedly the most renowned loan type. It is also officially termed by the government as IRRRL (Interest Rate Reduction Refinance Loan).

The definitive characteristic of VA loans is the fact that veterans having qualifying income and credit are able to buy a home without having to make a down-payment on their own, and this makes purchasing a home highly attractive for people who have military experience under their belt. Apart from this, VA loans further provide flexible requirements, extremely competitive rates for mortgage, and no PMI (private mortgage insurance).

To gain qualification for VA loan, one must have already served 90 days in war time, 181 days in peacetime, or 6 or more years with the National Guard or Reserves. If a veteran gave their life or suffered a disability while serving the country, their spouse also qualifies for the loan.

To sum it up, almost all honorably discharged and active duty service personnel is eligible to get a streamline refinance or VA purchase.

Here's a quick rundown of our list:

THE IRRRL (STREAMLINE REFINANCE LOAN)

The IRRRL (Interest Rate Reduction Refinance Loan) is also called the VA Streamline Refinance. This loan enables someone to refinance their existing mortgage interest rate to a lower rate.

This loan is quite popular thanks to the fact that it is simple and easy. Once a person has already gotten approval for their initial purchase of a VA loan, they can easily lower their interest rate while getting significant savings. In many cases, a lender or loan officer with expertise in such loans can complete this loan within 30 days.

The closing costs of VA loan can be added to the total cost of this loan, which enables veterans to get refinancing without any added expenses. A few times, it is further possible for lenders to get the impact of the costs in substitute for an interest rate that is higher.

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For qualifying to get a Streamline Refinance, you will need to meet the following requirements:

  • Remain current on their mortgage having not more than late payment of 30 days within the last year

  • Their monthly new payment to the Interest Rate Reduction Refinance Loan must further be less than their previous loan’s old monthly payment. One case in which this doesn’t apply is when the person refinances an ARM for a mortgage of fixed rate.

  • They must not get any money from the Interest Rate Reduction Refinance Loan.

  • They must certify they previously resided in the property.

  • They must have used their eligibility for the VA Loan previously on the given property, which they want to refinance.

THE CASH-OUT LOAN FOR VA REFINANCE

Another loan type for VA refinance is the refinance loan for Cash-Out. This Cash-Out loan enables a borrower to get refinancing for their VA or conventional loan to a lesser rate whereby also getting money for the value of the home.

As far as its functionality is concerned, the Cash-Out replaces one’s current mortgage rather than being home equity loans. A borrower that is qualified can refinance as much as 100% of the value of their home in a few incidents.

The Cash-Out loan is a type of loan that is available in all forms – including conventional, FHA, or USDA. Borrowers mostly opt for using the Cash-Out as compared to other types of loan primarily due to the period for paying the loan off is wider and moreover, it also offers an interest rate that is relatively lower.

Similarly to the Streamline Refinance, the house needs to be used by the owner as a primary residence. It doesn’t matter how long you have owned the home; you just need to have enough equity in the property to gain qualification for this loan.

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FREQUENTLY ASKED QUESTIONS (FAQs) FOR VA STREAMLINE REFINANCE

Are mortgage interest rates controlled by the VA for any of the loans?

No, they are not. Despite the fact that the VA provides a straightforward and easy method for veterans, the rates of mortgage are always set by banks that sell and buy mortgages.

For a Streamline Refinance, do you need my COE (Certificate of Eligibility)?

As you must have used your COE to get the first VA loan, the certificate isn’t required for qualifying for a streamline refinance of your existing mortgage of VA.

Do you have to get the check & appraisal process for credit again while refinancing?

As you have already been approved to get a VA loan, you do not have to go through another check and appraisal process. Nonetheless, several lenders make it necessary for borrowers to get check & appraisal for credit for guaranteeing that they are stable enough financially to pay off their mortgage while also ensuring that the market value of the house is more than the maximum amount of loan.

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Do you have to use your current lender to refinance the VA loan?

No, you do not. What’s more, shopping around between several lenders is encouraged as each offers varying interest rates for the VA loan. The important thing is that the lender should be VA-approved. 

Can you get cash-in-hand during the closing of Streamline Refinance?

Yes, you can receive cash-in-hand as much as $6,000 at your IRRRL closing. However, the cash needs to be utilized for improvements in terms of energy efficiency and needs to be reimbursed for improvements that are made inside 90 days before the closing. A few VA borrowers can get cash disbursement with outdated escrow funds as well.

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In order to qualify for Streamline Refinance, do you need to be eligible to get a relatively better interest rate?

This isn’t the case of meeting certain conditions. If you are going from a single fixed mortgage to yet another fixed mortgage, the VA needs to ensure that the IRRRL actually has a lower interest rate. However, if you are moving from an ARM to a single fixed rate mortgage, the VA allows you to refinance to an interest rate that is higher. 

With Streamline Refinance, can you change your borrower-of-record?

Overall, the borrower obligated in the first loan of VA must always be the exact same person obligated on the streamline refinance. This isn’t possible at all times, however.

Is there a maximum loan size allowable for the VA IRRRL?

No there are no max loan size limits for VA loans. Despite this, Streamline Refinance is limited to the current loan balance along with an accrued fees and charges that are late. Costs of improvements for energy efficiency and typical costs of the loan are also associated in this.

Can you use the IRRRL if your loan is delinquent or behind?

Yes, you can use the streamline refinance IRRRL in the case that your loan is delinquent or behind. Your lender will need to inquire about the main cause of this delinquency and whether it has been resolved, plus you must be able and willing to offer payments on this new loan. Moreover, you will need to offer a letter explaining the delinquency alongside additional documentation supporting the letter. After that, it is left up to the decision of the Department of Veterans Affairs.

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Can a VA loan qualify in HARP 2.0 mortgage program?

No, VA loans are different from HARP 2.0 program.

Can you use your Streamline Refinance in an investment property?

Yes, you can use your streamline refinance in investment property. You will need to certify that you occupied the property as your home at some point, but it doesn’t need to be your primary residence.

To get a mortgage with no money down, can you make use of VA loans?

Yes, VA loan enables 100% financing if you go for no down payment.

Getting Started

Okay, so you've read this far and are intrigued.

You understand the basics of a VA Streamline Refinance - but don't know where to start.

Or maybe you want to know a little bit more about the VA IRRRL Streamline Refinance.

Check out our blog posts answering some questions, looking at the pros and cons of the IRRRL, talking a little bit more about the loan limits, or even look at why an IRRRL VA loan might be right for you. 

You might be in a position where you want to lower your monthly payments, take cash out and pay off bills, or take cash out and buy your next investment. 

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What should you do next?

My suggestion – contact me.

Why not get started now?

Your VA Streamline Refinance Expert,

Scott

5 San Diego VA Streamline Refinance Loan Secrets Revealed!

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