One option you may come across as a veteran is a financial instrument called an IRRRL. The letters stand for Interest Rate Reduction Refinancing Loan. It is often referred to as a “VA to VA” or simply a “streamline refinance”.
What Is the Benefit of an Interest Rate Reduction Refinancing Loan?
Most of the time, when an IRRRL closes, the result is a lower interest rate for your mortgage. Who doesn’t want that!? The one catch is if you are refinancing an existing VA ARM loan to a fixed rate. In this case, your interest rate may actually increase but you will have the peace of mind that your monthly payments won’t change like they might with an ARM (adjustable rate mortgage).
What Veterans Should Know About IRRRL
A few things to note when are you are considering an IRRRL. It’s fairly straightforward.
- There are no appraisals or credit underwriting packages by the VA (more from the VA here). The lender has the right and may access a credit report and /or request an appraisal.
- No need for a Certificate of Eligibility (COE) and the lender can use the VA’s email confirmation system.
- This type of loan is only good if you are currently taking advantage of your eligibility on the the property you are considering refinancing.
- The occupancy requirement is different than other VA loans. For an IRRRL you only have to show that you once lived in the property in the past. This is great news if you are planning to use the dwelling for a rental, booking rentals, flips, etc.
- Rates may vary, so we recommend that you connect with at least 3 different lenders to find the best deal.
A few other keys to this program are there are many lenders who can do the IRRRLs so it pays to search for one that fits you best. Also you can’t receive any cash from the proceeds but do benefit in other ways.