One of the most popular refinance options in the market for veterans right now is what’s called a VA Streamline loan, also known as, an Interest Rate Reduction Refinance Loan (IRRRL). The benefits of this loan program are extraordinary and designed to be a quick and easy process from start to finish. Of course, there will be a normal loan application but not as much personal information is required.
Benefits of an IRRRL:
*Note: some restrictions may apply depending on your lender
The sole purpose of a VA streamline is to lower the interest rate and the mortgage payments for veterans that currently have an existing VA mortgage. Generally, an IRRRL is always a fixed rate and must give a lower interest rate than the loan it is refinancing unless the loan being refinanced is currently an Adjustable Rate Mortgage (ARM).
The following fees and charges can be included in an IRRRL:
For IRRRLs to refinance loans 30 days or more past due these loans must be given prior approval by the Department of Veteran Affairs. If the VA approves this request then the following can be included in the new loan:
*Note: under the above mentioned circumstances regarding current mortgage late payments, the VA and Lender have the right to approve or deny the loan at their own discretion
Other important information regarding VA Streamline loans:
A traditional VA refinance is when the veteran’s current mortgage is a non-VA loan, and the intention is to lower the interest rate and possibly the monthly mortgage payment. All standard documentation requested by the VA for approval will apply to this loan program. Keep in mind, this refinance program allows a new loan up to 90% of the home’s appraised value, including all closing costs and VA funding Fee (if applicable). So, if a veteran is considering a traditional VA refinance then the appraisal is extremely important. If the subject property does not appraise for a value high enough to cover the current mortgage payoff, all closing costs, and the new funding fee then the veteran is responsible to pay the difference.
Types of mortgage loans that might be eligible for a VA refinance:
**The State of Texas does NOT allow VA cash out refinance loan at this time**