WHAT YOU GET OUT OF A VA IRRRLThe military is always good about coming up with acronyms and the Department of Veteran’s Affairs is no stranger. The VA IRRRL stands for the Veteran’s Administration’s Interest Rate Reduction Refinance Loan. If you currently have a VA mortgage and are thinking of refinancing, your mortgage lender will no doubt talk about this special mortgage program. It’s easy to qualify for as long as the existing and future loan meets certain conditions. So easy that it’s nicknamed a “streamline” mortgage by VA lenders. What’ so special about the IRRRL they call a streamline?
The reason the loan is so easy to qualify for is because there is hardly any documentation needed to approve the loan. In fact, it probably takes longer to list what isn’t needed compared to what an approved VA mortgage lender will ask for. What surprises most streamline borrowers at first is there is no income documentation required. When borrowers first take out a VA loan they’re asked to provide full documentation of income for the past two years. Two years of income tax returns for those self-employed. Two most recent W2 forms. Most recent paycheck stubs covering a 30 day period. It was no small effort. With the VA IRRRL, none of that is needed. That’s right. No income information and no employment verification. This literally means someone can be unemployed and still qualify.
There are no valuation issues, either. This means no appraisal will be needed by the lender. Even though an initial VA loan requires no down payment, a standard VA refinance will require an appraisal and if the borrowers are “upside down” on their house, where the mortgage balance is greater than the current market value of the home, a refinance application can’t be approved.
There are no minimum credit score requirements, in fact, the VA doesn’t require a credit report at all. The VA approved lender is required to make sure there are no more than one mortgage payment made more than 30 days past the due date within the previous 12 months and the current mortgage must be current. Closing costs may also be rolled into a streamline refinance and your VA lender can also adjust your interest rate slightly and provide a lender credit to be applied to your closing costs.
The very basic requirement for the VA IRRRL is that you must be refinancing an existing VA loan into a new VA loan. Your new monthly payment must be lower than the existing one or you’re refinancing out of an adjustable rate mortgage or hybrid into a fixed and you cannot take any cash out during the transaction.
VA loans are the ideal choice for those active in the military or veterans wanting to buy a home with no down payment required and minimal closing costs for those who qualify. VA loans also have an extended benefit when refinancing out of an older VA loan into a new one, the VA IRRRL. If you have an existing VA loan and are thinking of refinancing, call your lender and ask about the VA streamline refinance.
For more information or questions about refinancing,
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