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IRRRL Program Pros and Cons

IRRRL Program Pros and Cons

In this article, we will explore the IRRRL program pros and cons. The IRRRL is also known as the streamline refinance.  IRRRL stands for Interest Rate Reduction Refinance Loan.

irrrl program pros and cons

There are a lot of benefits associated with the VA IRRRL program. Some of  these benefits come hand in hand with it simply because it is a “streamline”. Other benefits come from the specific policies and terms the VA has in place to make the streamline refinance a more attractive option for veteran borrowers.  While there are many pros to the IRRRL, there are also a few cons or situations it may not be appropriate. We will go over the IRRRL program pros and cons however in this article we will focus a little more on the IRRRL benefits.

irrrl program pros and consVA Streamline Refinance Pros and Cons

Pros

  • Save money by lowering your interest rate
  • In most cases no appraisal is required
  • Employment proof is usually not needed
  • No dept to income verification
  • No minimum FICO score check
  • Change your loan terms
  • Faster closing times
  • Option to defer two months of mortgage payments
  • Usually keep your escrow refund
  • No cash due at closing

Cons

  • Not enough net tangible benefit
  • No cash back, however you might want to consider the VA cash out refinance option if you would like to tap into the equity of your home.
  • As with any loan there are closing costs

The 3 Biggest Benefits

1) You save money and reduce your interest rate.
2) IRRRL loans are much easier and faster to underwrite than conventional mortgage loans.
3) You can roll all your closing costs into the VA IRRRL loan.

 

The Streamline is Fast & Easy

Many of the pros that come with the VA IRRRL come by virtue of it being a streamline refinance option. The first major benefit is that an IRRRL is wickedly fast – being able to be completed sometimes in as little as 10 – 15 days. Compared to the 30-45 day average for new purchase loans and standard refinances, an IRRRL is done and closed before you can blink. An IRRRL is also relatively painless compared to normal refinances; when you get an IRRRL, you will not be required to verify your income, assets, or employment, which saves enormous amounts of time. You will also not be required to get a new appraisal of your home, which saves you both time and money. Being a streamline, the IRRRL is designed to make the process fast, easy, and affordable for you. In addition to all of the above benefits, there are also benefits to the IRRRL that the VA has implemented to make it more available and attractive to more veteran borrowers.

Roll in Your Closing Costs

One of those benefits would be in the area of closing costs. If you have purchased a home before you know that you cannot “roll” in your closing costs. What I mean by that is that when you purchase a home you cannot include the closing costs or escrows into your mortgage payment. This is the case on some refinances loans as well, such as another popular government-sponsored loan, the FHA refinance. FHA offers a streamline process similar to the VA IRRRL however you cannot include your costs. With the VA IRRRL, you can include or “roll” your escrows and any loan costs into your loan.  The IRRRL also allows you to buy discount points in order to reduce your rate even further. The best part is you can include those costs as well and save even more money every month. This saves you sometimes thousands of dollars!

VA IRRRL Guidelines

Another great benefit to the VA IRRRL is in the guidelines. The VA IRRRL guideline states that a Veteran will qualify for a VA IRRRL only if he/she can reduce their monthly payment, all fees that are incurred must be recouped within 36 months.  Also, you must have made at minimum 6 mortgage payment on your loan and be at least 210 days from the date your first payment was made. These are all in place to protect the Veteran from predatory lending. Prior to these guidelines being put in place loan officers would give Veteran borrowers higher rates and then give them an IRRRL a month later charging them new fees over and over again. Now, Veterans only do an IRRRL when it makes financial sense, the way it should be!

More Relaxed Occupancy Requirements

Another cool thing about the IRRRL is that it has a looser occupancy requirement. For a borrower trying to get an IRRRL, they simply have to certify that they previously occupied the property, rather than that they currently do. This is designed with active service members in mind. Often, an active service member buys a house, then receives PCS orders and is required to move and try to sell their current house as quickly as they can. Many a service member has been hurt financially because of this situation. So, the VA decided that those service members should be able to quickly (as little as 10 days) get an IRRRL to refinance their home so they can rent it out rather than have to sell it. This is a major boon to active service members doing their best to make a good home for their families in spite of the oft-changing military life.

Energy Efficiency Mortgage (EEM)

Lastly, the IRRRL does allow a borrower to take out an Energy Efficiency Mortgage (EEM) on top of their new loan. An EEM allows a borrower to take up to $6,000 to make energy efficient improvements to their home. The borrower will have to itemize the improvements they wish to make, and only the amount required to make the changes will be lent, but a lot can be done to improve a home for $6,000. There are numerous other little benefits that could be discussed, but we’ve covered the major ones here.

Call Us!

If you would like to learn more about the VA IRRRL program pros and cons call us now at 855-956-4040.
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  • Douglas Knutsen
    · Reply

    March 4, 2020 at 6:35 AM

    With VA IRRRL, could I qualify moving from a 20-year VA refi to a much lower rate 15-year VA IRRRL, even if the new payment is higher?

    • admin
      · Reply

      Author
      March 21, 2020 at 7:01 PM

      Douglas, thank you for the question. Yes, you can adjust the term on your loan while doing a VA IRRRL. In fact, I am doing a number of IRRRL’s just like that. It is amazing how much more or your payment goes to principal instead of interest when you reduce the term even as little as 15 years. If you would like to see what rates are on a 15 year and get an idea of your new payment and how much money you will save over the life of the loan feel free to call us at 855-956-4040.

      • Shaun L.
        · Reply

        May 15, 2020 at 5:25 AM

        If I do an IRRRL Refinancing on my house, will this be able to free up my VA COE letter so that I can use it for another home while I try to sell the original house? In other words, I need the VA to guarantee up to my full COE for the new house and due to me being under the present loan that I am under, I don’t have access to 100% of the COE.

  • Omar Powell
    · Reply

    June 2, 2020 at 5:31 AM

    I purchased my house in San Diego in July 2019 for $425k at 3.65%. Can I refinance now. I would like to pay off my house in under 10 years.

    • admin
      · Reply

      Author
      June 5, 2020 at 10:01 PM

      Hi Omar! Thanks for the question and congratulations on buying your home last year! Now is a perfect time to refinance your VA loan using the VA IRRRL Program. It is a streamlined process that does not require an appraisal or income documentation.

      If you would like to get approved for a VA IRRRL you can go to http://www.nationalapplynow.com and complete a secure application. Once I receive it I will structure it and give you a call to discuss. Or you can call us at (855) 956-4040.

      I would also like to show you a number of ways to reach your goal of paying your house off quicker. Shaving the interest rate is the first step for sure!

      Thanks again for the question. Thank you for your service and have a great weekend!

  • Samuel
    · Reply

    June 10, 2020 at 1:31 PM

    I want to know if we decide to refinance, do I have to start over at 30-years or where I’m at now?
    If I don’t have to start over, will I still be able to get a lower payment?

    • admin
      · Reply

      Author
      June 11, 2020 at 8:05 PM

      Samuel, thanks for reaching out to National VA Loans. That is a great question! Mainly because it has multiple answers. When would be a good time for us to chat for a few minutes? Rates are extremely low so you can save money and not lose any ground from the payments you’ve already made.

      You can reach me at 855-956-4040. I really look forward to talking to you and working with you to complete your mortgage. Thanks Samuel, talk soon!

  • Elaine W.
    · Reply

    July 12, 2020 at 4:12 PM

    I’ve been hearing more and more about China buying up US land and businesses, so my question is: who is backing the lower interest rate and loans?

  • DeeAnn
    · Reply

    August 11, 2020 at 4:26 AM

    We have 21 yrs left on our VA loan. We want to payoff in 10 years and are trying to do an IRRRL streamline. A lender told me that you cannot reduce the number of years on a VA loan to less than it would have been and said we would have to get a loan with a longer repayment period (20 or 30 years).
    This doesn’t make sense to us, help?

  • Chris Kappell
    · Reply

    October 14, 2020 at 9:37 AM

    Rocket Morgage with QUICKEN LOANS charged me $400 for a appraisal and want my one month deferred payment to cover closing costs, around $1690. Is this correct for a VA streamline refinance?

  • Hubert A. Sims
    · Reply

    January 21, 2021 at 2:41 PM

    I received a letter from a lender called The Federal Savings Bank, offering a VA IRRRL; I talked with a loan rep he pulled my credit, and asked for my DD 214, Employment verification, Homeower insurance, and a copy my Note. Would like to know if all of these documents required, and if The Federal Savings Bank is a real company? Their NMLS ID#411500. I purshased my current home in July 2020, and I do meet all of the VA IRRRL requirements. If I work with National VA Loans would you require all of this info? Thanks.

    • admin
      · Reply

      Author
      January 25, 2021 at 6:47 PM

      Thank you for your question. The Federal Savings Bank is real and we have run up against them a number of times. It sounds pretty common what they are asking for. When we do a VA IRRRL we will typically ask for your note, drivers license, social security card, mortgage statement, and insurance agents contact info. Currently we are at 2.25% on a fixed 30 year VA without any fees. Let us know if there are any other questions we can answer or if you would like to take a look at a loan with National VA Loans and Community First National Bank.

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National VA Loans is dedicated to helping veterans and military service members get a great mortgage. National VA loans is powered by Community First National Bank, Community First National Bank is Member FDIC. Equal Housing Lender. NMLS ID 449196.
National VA Loans is not affiliated with any government agencies, including the VA, FHA, or HUD.
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