VA IRRRL or Streamline Refinance

Many Veterans are taking advantage of the present low interest rates available to refinance their current VA loan. The Streamline, technically known as the IRRRL (Interest Rate Reduction Refinancing Loan) is a loan designed to take an existing VA loan and allow it to be refinanced to a VA Loan with a lower interest rate. The interest rate on the new loan must be lower than the interest rate on the present loan. The exception to this is where an ARM (Adjustable Rate Mortgage) is being refinanced to a fixed rate mortgage. This is the only scenario where the interest rate is allowed to be higher on the new loan.

Qualifying for an IRRRL (Streamline) is relatively simple. The VA does not require an appraisal or minimum credit score for a streamline. The amount of closing costs charged the borrower are regulated by VA guidelines and can be rolled into the new loan. Generally the veteran is eligible if the payments on the present mortgage are current. However, specific lenders have tightened their requirements during the past couple of years so it is wise to check with a lender to see what is required. When the original VA Loan was incurred the buyer was required to live in the home. With a VA Streamline you do not currently have to be living in the home.

You do not have to do your IRRRL through the Financial Institution currently holding your VA Mortgage. You can choose any Lender to deal with. Of course you will want a lender who is qualified to do VA Loans and will respond to your emails or calls in a timely manner and takes your refinance as seriously as they would if they were working on their own home loan.

As far as Veterans Eligibility goes, the same certificate of eligibility that is on the current VA mortgage is used on the streamline and can be verified online by the Lender handling the loan.

This is not a Cash out Refinance and the borrower is not allowed to take cash as a result of the deal. However, there are two possibilities where the borrower can end up with some extra money in addition to the benefit of a lower interest rate. If there is money left in the escrow reserve account for the current mortgage there will be a refund. The amount of the refund could be possibly be around $1,000, more or less depending on the remaining balance at the time of closing. In addition, as a result of refinancing, one or two monthly mortgage payments may be deferred.

The length of the Streamline mortgage can be 10-30 years. Veterans who are in a position to refinance from a high interest rate to a lower rate often consider doing a 15 year loan so that the home is paid off sooner. Even with a lower interest rate, the monthly payment generally will go up when changing from a 30 year to a 15 year mortgage. If the borrower can afford the increased monthly payment, a 15 year loan is definitely one to consider because of the long term benefits.

Many veterans have taken out a second mortgage on their home and wonder if they can still get a streamline. The answer is yes if the second mortgage holder will sign a subordination agreement.

The application process is quick and easy "streamlined" and can be explained by your Lender. Just make sure you are dealing with a Lender and a Loan Officer who is experienced in assisting Veterans with VA Loans, IRRRLs and Refinances.