VA Streamline (IRRRL) Refinance
The guidelines and qualifications that follow should be able to give you a good understanding of the VA streamline refinance process and what is involved in getting the refinance done. These are some easy to understand basic facts that include what it takes to qualify as well as other specifics about an IRRRL.
A VA streamline refinance is known as an IRRRL. IRRRL stands for Interest Rate Reduction Refinancing Loan. This is also known as a "VA to VA" loan. While this type of refinance must normally result in a lower interest rate, there is an exception. When a VA adjustable rate mortgage loan is refinanced to a fixed rate, it is possible that the new rate could be higher.
While your specific lender could require a new appraisal and credit report, these are not required by the VA as part of the refinance. A certificate of eligibility is not required for an IRRRL streamline refinance. The lender is allowed to use the VA's email confirmation procedure for an interest rate reduction refinance rather than a certificate of eligibility.
An IRRRL can be done with no money out of pocket for the borrower. Any costs are allowed to be included in the new loan, or the loan can be done at a high enough interest rate that will enable the lender to pay the costs, provided that the interest rate is still lower than the old loan if it is not an ARM.
You can choose any lender you like to do your VA streamline refinance. It is not required that you use the same lender you currently have or your original VA loan lender. Contacting a variety of lenders could result in getting the best rate possible while also saving money on closing costs. Be wary of any potential lenders who contact you stating they are the only lender that is qualified to offer you an IRRRL, as any lender will be able to handle your streamline request.
The only cost associated with the VA as part of the cost of your IRRRL is a one half percent of the loan amount VA funding fee. Any lender that states there are VA closing costs included in the loan is one that you should think twice about doing business with.
There is no cash out allowed on any VA streamline refinance. An IRRRL must be a VA to VA refinance, and the eligibility for a VA loan must have been used on the property on which the loan is being refinanced. While you may have had to occupy the property to qualify for the original VA loan, to qualify for the IRRRL you only need to certify that the property was previously occupied by you.
Although there is a no cash out clause involved in this type of refinancing, there is an allowance for energy efficiency improvements of up to $6000. While the new loan balance is not allowed to exceed the old mortgage balance, allowable costs and fees, such as closing costs and the VA funding fee, as well as up to 2 discount points, are allowed to be included in the new loan balance.
Rob K. Blake, refinance expert and author, educates mortgage shoppers on finding local providers by state like Kentucky Mortgage Brokers and Lenders and provides reviews of national companies like Accredited Home Lenders.
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