When it comes to the VA Refinance their are two main options. The VA cash out refinance and the VA IRRRL. The IRRRL is also known as the VA streamline refinance. The IRRRL loan is abbreviated as Interest Rate Reduction Refinance Loan. The VA IRRRL is used to refinance one mortgage into another, to reduce your current rate into a new lower rate, and in most cases a lower monthly mortgage payment. Also with the IRRRL program, you can move from an adjustable-rate loan to a fixed rate mortgage. The IRRRL program offers current veteran homeowners an excellent opportunity to take advantage of low-mortgage rates with the backing of the VA. The IRRRL again is also known as the VA streamline is exactly that, a streamlined process to refinancing your current mortgage. The VA has made this an easy process for veterans to help them save money and get a lower interest rate.
Finding the Best IRRRL Lender
How do you go about choosing the best IRRRL lender? Great question, finding the best VA IRRRL lender simply comes down to getting the best possible rates and finding an experienced VA mortgage specialist. Shopping around to find the best refinance rate is important, it could save you hundreds or possibly thousands of dollars over the life of the loan. You also need to be aware of predatory lending.
The Consumer Financial Protection Bureau and the VA have issued their first warning order to service members and Veterans with VA loans. There has been an uptick of unsolicited offers sent to unsuspecting homeowners promising cash back, skipped mortgage payments and super low rates. These lenders can be aggressive and use misleading advertising tactics to lure you in. To read what the VA has to say about this situation, click here.
VA IRRRL Mortgage Rates Explained
Interest rates are probably what got you started down this path, so let’s begin there. VA IRRRL rates have stayed desirable throughout 2019 and should continue into 2020. Interest rates are based on many factors, so they can change daily. Actions by the Federal Reserve, the state of the economy and world events all have an impact.
A rate that’s a full percentage point below your current mortgage will give you the most benefit. A $150,000 loan at 5% interest will cost$805.23 per month. At 4%, that payment goes down to $716.12, saving you almost $90/month. As you can see, it pays to shop around.
The IRRRL, is a program offered to anyone who already has an existing VA loan. This loan is also called a VA Streamline refinance because the process is designed to be a quick and easy process to refinance VA loans. In fact, you can generally apply and close in under 30 days, whereas a traditional refinance can take upwards of 45 to 90 days in some cases. It’s intended to be an efficient way for you to replace your current VA mortgage with a new, lower interest rate. The VA IRRRL program is also a useful way to move from an adjustable rate mortgage to a fixed rate mortgage. Sound good?
Like any refinance, you should also make sure the benefits outweigh the costs involved. There are always costs associated with refinancing your mortgage, including closing costs and the VA Funding Fee. You may even opt to pay for something called points to further lower your interest rate. The good news is that all you can roll all these fees into the loan itself. That saves you from having to put out any cash to take advantage of the program. So, what are the VA IRRRL allowable closing costs and prepaids?
How do I Qualify for a VA IRRRL?
Qualifying for the VA IRRRL program basically has two main factors. If you are a current homeowner that used your VA benefits to purchase your home chances are, if you qualified for a VA loan in the first place, then you are qualified for the IRRRL VA refinance. That being said there are a few exceptions to this, and requirements can vary, but generally speaking, that is the case. The second factor is your current situation. If the IRRRL benefits your current situation and it makes sense then there is usually no problem. If the Interest Rate Reduction Refinance Loan is something that you would like to consider the best thing to do is call (855) 956-4040 to talk to a VA loans specialist.If you’ve gotten married since you got your VA loan, and are wanting to add your new spouse as an obligor on the loan, you may be able to use an IRRRL to do so but it will at least need to be submitted for prior approval to the VA, and will not be nearly as “streamlined” as it would be otherwise. The same is true for a divorce where one or more of the obligors are getting taken off the loan. In cases of joint VA loans where the obligors change, an IRRRL is usually not possible. This is one way that your situation can disqualify you from being able to use an IRRRL to refinance your loan. In these cases, you will need to use a standard refinance to update your mortgage. A change of obligors is not the only situational variable that affects your ability to use an IRRRL.The VA requires that an IRRRL results in a net benefit to the borrower. They require that your interest rate must lower as a result of the IRRRL unless you are going from an ARM to a fixed-rate mortgage. ARM loan interest rates are calculated differently, and are often lower than their fixed-rate counterparts. The VA also requires that your principal and interest payment becomes lower (which usually happens by default when the interest rate lowers), or the remaining term on the loan must decrease. Even if you secure a lower interest rate, your payment might get higher if you choose a shorter term, since you’re paying off more principal each month.
