What is the VA IRRRL ?
The VA IRRRL is another way to refinance your current VA loan into a lower rate and monthly payment unlike a traditional VA refinance.
IRRRL stands for “VA Interest Rate Reduction Refinance Loan” and this loan program is also known as the VA Streamline Refinance or a VA-to-VA refinance depending on who you talk to.
With the VA IRRRL, there’s much less documentation (no credit, income, or employment verification) and you might not need an appraisal. Closing costs also tend to be lower, and can be rolled into your loan to eliminate upfront out of pocket money.
VA IRRRL rates today
VA IRRRL rates are some of the best mortgage rates on the market and Thanks to backing from the Department of Veterans Affairs, lenders can offer exceptionally low interest rates on these loans.
How the VA IRRRL works
Like any mortgage refinance, the VA IRRRL program replaces your existing mortgage with a new loan. The new loan starts fresh at 30 or 15 years, depending on which loan term you choose.
But the process for a VA Streamline Refinance is a little different from a traditional refi making it MUCH easier to qulaify for and the process is MUCH easier.
Because there’s no income, employment, or credit verification required, borrowers have less paperwork to handle. And you don’t need a new Certificate of Eligibility (COE), because the IRRRL can only be used on an existing VA loan. So the lender already knows you’re VA-eligible.
Finally, there’s no Home Appraisal and no Pest Inspection. This can shave a week or more off your loan’s underwriting time — so VA Streamline loans typically close faster than other refinances with less inspections saving time and money.
Is the VA IRRRL program worth it?
As with any refinance, using the VA IRRRL results in a brand new loan. So your mortgage will start over at 30 or 15 years, depending on which loan term you choose but you can always pay extra with your payments to payoff the loan earlier if you don’t want to restart your loan term.
But using the VA IRRRL is worth it for many Veterans.
That’s because today’s ultra-low VA rates can result in a much lower monthly payment and potentially save you thousands in interest payments in the long run while providing you monthly savings from immediately.
Another big benefit is that VA loan closing costs can be rolled into the loan. This allows veterans to refinance with few or no out-of-pocket expenses. If you have any form of Disability with the VA, you are also EXEMPT from the VA funding fee.
Sometimes it is also possible for the lender to absorb your loan costs in exchange for a higher interest rate on your loan.
Benefits of a VA Streamline Refinance
The VA IRRRL lets veterans and service members refinance their current mortgage loan to a lower rate and monthly payment by at least .50% to the rate.
The biggest benefits of the VA Streamline program compared to other refinance options are:
- Limited paperwork
- Low interest rates
- No private mortgage insurance (PMI)
- Appraisal typically not required
- May be able to refinance with little or no equity
- You might have low or no closing costs
- A low credit score won’t disqualify you
- Available to most veterans and active-duty members of the armed forces from all branches, including many Reserves and National Guard members
The VA Streamline loan program is extremely popular because it’s easy to use and most Veterans benefit from it since rates have been so low.
If you already have a VA mortgage on your home, the IRRRL program makes refinancing to a lower rate relatively quick and painless.
However, lenders can set their own requirements for credit checks and appraisals so make sure to check with your loan officer.
Who qualifies for a VA IRRRL?
To qualify for a VA Streamline Refinance (IRRRL), your current mortgage must be a VA home loan.
Homeowners must also meet underwriting requirements set by the Department of Veterans affairs.
Current guidelines for the IRRRL include:
- You are current on payments with no more than one 30-day late payment within the past year
- Your new rate and monthly payment for the IRRRL must be lower than the previous loan’s monthly payment. The only time this condition does not apply is if you refinance an ARM to a fixed-rate mortgage
- You must not receive any cash from the IRRRL
- You must certify that you currently or previously occupied the property
- You must have previously used your VA Loan eligibility on the property you intend to refinance. You may see this referred to as a VA-to-VA refinance
- You must reduce your rate by at least .50%
- You must be able to recoup your closing costs in under 36 months
You can easily figure out if you meet the VA IRRRL guidelines by filling out the quick form below and speaking with a Loan Officer