VA Streamline Refinance: A Quick Way To A Better Mortgage

The VA streamline refinance, also known as Interest Rate Reduction Refinance Loan (IRRRL), is a simplified loan with relaxed requirements for veterans and service members. It is one of the best options for homeowners who have received a VA loan and would like to refinance into a lower interest rate and also lower their monthly mortgage payment.
VA streamline refinance is an easy and quick process because borrowers are only refinancing from one VA loan product to another.

VA Refinance Rates

VA refinance rates is one of the lowest in the mortgage market, although refinance rates vary by customers. Although, your VA refinance rate might be higher or lower than the average rate 2.25%(2.421% APR) depending on the amount of your loan, credit score, loan to value ratio, and some other factors.

Loan Type Today’s Average Rate
VA 30-years fixed rate 2.25% (2.421% APR)
VA 15-years fixed rate 2.25% (2.571% APR)

How Does VA IRRL Streamline Refinance Work?

A VA IRRRL is used to refinance an existing VA home loan into a new one, and it is an improvement on your old VA loan. With a refinance, you can get a lower rate, a lower monthly payment, or even both. You can also move to a fixed-rate loan from an adjustable one.
IRRL’s are so much easier to navigate than the regular VA loan, so both lenders and borrowers love the VA IRRL. Once you have been previously approved for a VA home loan, it is easy to lower your interest rate and experience significant savings. You will still need to meet VA loan eligibility requirements and deal with a VA approved lender, but your lender is not required to make all those time-consuming paperwork like employment and income verification. The VA department insists that a refinance must result in a real financial benefit, so rest assured your refinance will be approved.

Another amazing benefit? The VA IRRRL closing costs can also be rolled into the loan, so this allows veterans and service members to refinance with little or no cash.

The next question on your lips, at this point, would probably be your eligibility for a VA IRRRL. Lets take a look at it.

Am I Eligible For a VA IRRRL?

You will be eligible to get a VA IRRRL if you:
Already have a VA funded home loan
You are using the IRRL to finance your existing VA loan
Can certify that the home covered by the loan is your primary home or used to be your primary home.
You do not default monthly mortgage payments, with no more than a 30 days late payment.
The rate for the IRRRL and the monthly payment is lower than the original loan’s rate and monthly payment.

NOTE: if there’s a second mortgage on the home, the mortgage company must agree to make your new VA home loan the first mortgage. Also, you can find out if you meet the VA IRRRL guidelines by checking with a VA authorized lender.

VA Cash-Out Refinance Loan

The VA cash-out refinance loan allows qualified and eligible veterans and service members to refinance their VA loan or a conventional loan into a lower rate while getting cash from the home’s equity. The VA cash-out refinance loan should not be confused with a “home equity loan” as this is only a second home that runs alongside your current loan. The VA cash-out refinance loan replaces your existing mortgage and does not complement it.

Borrowers choose to use the VA cash-out refinance loan over other types of loans because the period to complete the loan payment is extended and also comes with a lower interest rate. Just like the VA IRRRL streamline refinance, the home must be the borrower’s primary dwelling place. There’s no fixed period that you must have owned your home, but you must have enough equity to qualify for the loan.

Background On VA Loans

VA home loan is a loan created specially for military persons. It is guaranteed by the Federal government and can be issued by any VA approved lender. The VA home loan incredible benefit is that qualified veterans and service members can purchase a home using the VA loan without any down payment or mortgage insurance payment, which makes it easy for individuals who have served in the military to own a place they can call home.

From its flexible and generous requirements to its low closing costs and interest rates, VA loans remain one of the most popular mortgage choices among veterans and active-duty service members first time home buyers.

VA Streamline Refinance FAQ

How much is the VA IRRRL Funding Fee?

For most borrowers, the funding fee is usually 0.5%. However, the funding fee can be waived in exceptional cases like; veterans with a service-connected disability, those entitled to receive service-connected compensation pay, surviving spouses of veterans that died as a result of a service-related disability, or died in service.

Also, the funding fee, when you have to pay one, can be paid from the proceeds of your newly acquired loan.

How Much Is IRRRL Closing Costs?

Closing costs and fees vary based on the lender so that you can ask the lender for more details.

Is the VA IRRRL Worth the Difference?

If the difference gives you a real benefit, such as a reduction in interest rate, monthly mortgage payment, or a fixed rate rather than an unstable rate, then of course, it is worth it.

When Can a VA Loan Be Refinanced?

The VA requires borrowers to wait for 210 days (7 months) from their last loan closing before refinancing. However, be informed that some lenders impose their waiting period of up to 12 months. So after seven months of waiting and your lender says it’s too soon to opt-in for a VA Streamline refinance, you can shop around for other lenders.

Do I Need My COE for a Streamline Refinance?

Since you have used your Certificate of Eligibility (COE) to acquire the first VA loan, it is not needed for a Streamline refinance.

Do I Have To Use My Current Mortgage Lender To Re-finance?

No, it’s not compulsory to use your current lender. It is usually advisable to shop around for various lenders and compare their interest rates and closing costs. However, ensure that lender you settled for is VA approved.

Do I Have To Go Through The Credit and Income Check Process Again When Refinancing?

There’s no imposition from the VA for another income and credit card. However, many lenders still carry out this check to be sure that the borrower is still financially able to pay for the mortgage.

Can I Use the VA Streamline Refinance for an Investment Property?

Yes, you can use the VA Streamline Refinance for an investment property. You only provide proof that you used to occupy the property.

What is the Maximum Acceptable VA IRRRL Loan Amount?

There’s no limit for a VA IRRRL loan. However, some lenders impose their loan limit, so be sure to confirm with your lender first.  

Can I Use VA Loan for a No-Money Down Mortgage?

Yes, you can use VA loans to finance 100% of your mortgage.

Enter your details below to begin your jumpstart steps right now!

You have Successfully Subscribed!