The VA loan program is arguably the best mortgage program in the market today, and an attractive option for qualified homeowners looking to take advantage of low rates and decrease their monthly mortgage payment. There?s no better time that in this current economic climate for military homeowners and veterans to take advantage of a VA loan. Also referred to as VA-VA loan, VA Streamline Refinance, IRRRL acronym for Interest Rate Reducing Loan allows existing VA loan holders to refinance their current VA loan and current mortgage interest rate to lower interest rates.
The closing costs of a VA loan can be rolled into the overall loan amount, which allows you to refinance without any out-of-pocket expenses. In addition, these loans also require minimal paperwork, and can be even be secured without an appraisal. There are a few requirements you must meet in order to qualify for an IRRRL loan including:
* Certify that you previously occupied the property
* Current on mortgage payment with no more one month late payment in the past year
* You VA loan eligibility was used on the property you wish to refinance
* You must not receive any cash remittances from VA Streamline Finance
* Your new refinance payment must be lower than the previous original loan?s payment except when refinancing a VA ARM (Adjustable Rate Mortgage) loan to a fixed rate mortgage.
An IRRRL loan is so much easier to obtain compared to taking out an initial VA loan, where you had to submit proof of income, W2 statements and sometimes even asked to produce bank statements, recent income tax returns and demonstrate a responsible credit history. The IRRRL process is much more simplified hence the moniker Streamline Finance, and as long as you?re refinancing an existing VA loan into another and the rate is lower or if you?re converting an ARM loan into a fixed price, you may be eligible.
The other perks of an IRRRL are that you do not need to submit a COE (Certificate of Eligibility) since you used it get your initial VA loan. Further, you do not have to use your current lender to take advantage of streamline finance, and in fact it is highly recommended that you shop around between various lenders as each will offer different interest rates. The VA (Veterans Administration) does not require a credit check considering that you were already approved for a loan.
Some lenders however may ask for an appraisal and credit check to ensure that you have the ability to pay for your mortgage, and the market value of the house is still higher than your maximum loan amount. With regards to the maximum loan amount, it is limited to the balance of the existing loan, and includes any accrued late fees and charges, costs of any energy efficient improvements and typical loan costs. At your IRRRL closing, you may receive up to $6000 cash-in-hand, which must be used for energy efficient improvements.
Take note that any lender can help you with an IRRRL, and the only cost you will incur by the VA is one-half of one percent of the loan amount as funding fees that can be paid in cash or included in the loan. An IRRRL is also a great opportunity to reduce the tenure of your loan from 30 to 15 years, but this may not be the best option for everyone as it might result in a significant increase in monthly payments. If you have an existing VA loan, streamline refinance or IRRRL is just another way to take advantage of your veteran benefits.