Veterans of the US Armed Forces who have purchased a home using their Veterans Administration (VA) benefits now have new options when it comes to refinancing. Homeowners are able to apply for an Interest Rate Reduction Refinancing Loan (IRRRL), also commonly referred to as a VA streamline refinance, or a “VA to VA” loan. The process of refinancing allows homeowners to continue to use their VA benefits and save money on the cost of their home.
The IRRRL refinance process is often called a streamline refinance because of the ease with which the refinance takes place. The VA does not require a home appraisal or credit underwriting, not do they require that veterans obtain their certificate of eligibility (DD214). Lenders are now able to verify that borrowers are eligible by using the VA email confirmation procedure which expedites the process.
The VA streamline refinance process is not only efficient but also affordable. An IRRRL may be processed and completed with no money out of pocket. Lenders are able to include all the closing costs in the price of the new loan, allowing borrowers to pay them off bit by bit each month. Lenders may also raise the interest rate slightly to cover the cost of the refinance, but the interest rate must end up being lower than the original loan for it to be approved.
No lender is required to issue a VA refinance, but any lender is qualified to do so if they choose. If you are looking for a lender, you do not have to use the same financial institution that originally wrote your loan. In fact, borrowers are encouraged to speak to several different lenders as lenders are able to offer different options when it comes to approval and loan amounts. In addition, the VA requires only one closing cost, which is only .005% of the total purchase price of the loan, so if you speak to a lender who tells you that the cost will be higher, you can know for certain that they are not being honest with you. This small VA cost may be included in the cost of the loan and paid off over time.
An IRRRL refinance can only be performed if you originally bought your home with your VA benefit loan. You cannot refinance a traditional mortgage to a VA refinance. If you feel that you meet the qualifications for a VA streamline refinance and you are paying interest rates that are higher than the national average, speak to a lender to see how much you could lower your rate and how much you can save on your loan. Speaking to a lender is free and easy! Call 888-729-8883 or fill out our form to get started.