VA Refinance loans are backed by the U.S Department of Veterans Affairs and offer a lot of benefit to veterans looking to save money. This special loan program is designed specifically for women and men who are in active military service, service members, veterans, or surviving spouses. The objective of VA Refinance is simple; to improve veterans’ financial situation by refinancing into VA refinance rates which yields a lower rate in monthly payment or term, payoff high interest debt or cash out for home improvement. Since VA loans are backed up by the government, monthly mortgage rates are lower with VA housing loans than conventional home loans.
If you are eligible and qualify, the program allows for you to refinance VA loan or cash out up to 90% of the value of the home with no mortgage insurance. VA loan rates are typically lower than conventional mortgage rate. This means you save money and get a better rate VA loan. Once you understand the basic steps involved with getting refinanced with your loans, VA refinancing will make you realize what a simple and uncomplicated process it really is to lower monthly obligations by using your VA Refinance entitlement.
VA Streamline Refinance (IRRRL)
The VA Streamline Refinance Program also known as “The VA Interest Rate Reduction Refinance Loan” (IRRRL) is designed to lower your interest rate by refinancing your existing VA loan. If you are currently in a VA loan and would like to lower interest rate by refinancing, the VA Refinance has made it easy for you. Since you already have a VA loan initially it’s a very simple and quick process to lower your monthly mortgage payments by taking advantage of this popular streamline VA refinance program. VA loans are available at low interest rates even to those who have low credit scores.
What are the Advantages of a Streamline?
You can’t get cash back with IRRRL, loan with Streamline refinances your current VA loans with another home loan but with lower interest rates along with these Streamline VA Refinance Pros:
You can switch from Adjustable Rate Mortgage to Fixed Rate Mortgage
Better refinance rates or loan rates
Lower monthly payment
No new certificate of eligibility (COE) required
No out of pocket money needed if you roll refinancing costs into the loan
Lower VA funding fee than VA cash out refinance
Fast turnaround time
No appraisal required
No income verification
No debt to income calculation
Streamlined paperwork process
Primary residence, investment or second home OK
What are the Requirements for a Streamline Refinancing my VA Home Loan ?
In order to be eligible for the IRRRL:
You will have to already be in a VA loan
You have meet previous VA loan requirements
No late payments in the past year on current VA mortgage
Your new IRRRL must be lower than current one to qualify
Converting an ARM to a Fixed is allowed even if payment goes up
640 FICO/credit score or higher to qualify
VA does not set a minimum credit score but lenders who make the loans often require borrowers in the loan terms a minimum credit score for their VA home loan.
What is a VA Funding Fee and how much is it for a Streamline?
The VA funding fee is collected by lenders at closing and is financed into the loan which helps offset the cost to fund the VA streamline program. It’s a requirement on all VA loans except when the veteran has had a service-related disability in which case they can be exempt from paying this fee. The funding fee is .5% for a veteran and for National Guard or Reservist
What Documents are Required to Qualify for a VA loan Streamline Refinance?
A copy of your driver’s license, or government issued photo I.D.
A copy of your DD Form 214 release paper or Statement of Service if active military
A copy of your existing VA mortgage statement
A copy of the Declarations page from your Homeowner’s Insurance policy
Current VA Refinance Rates (VA Mortgage Rates) for Streamline Program (IRRRL)
2.990% (3.145% annual percentage rate APR) 30-year fixed rate term
2.500% interest rate (2.799% interest rate APR) for a 15 year fixed rate loan type.
VA Refinance FAQ
Is it possible to defer two mortgage payments in my home refinance?
Yes, it’s possible to defer two monthly mortgage payments as part of your VA loan refinance
There is little to no equity in my home, can I still refinance?
Yes, you can. A VA loan streamline will allow you to refinance without an appraisal or even if your home’s value is zero.
Will there be an income check to qualify?
No, the lender will only verify if you are still employed but will not verify actual income. That is why debt to income is not a factor in qualifying for a VA Streamline Refinance.
Do I need a Certificate of Eligibility for a VA loan Streamline?
Typically, this is not required since used the COE to qualify for the original VA mortgage
Will my VA loan amount increase by doing a Streamline?
If you choose to roll in your closing costs instead of paying for them, closing your loan will increase by this amount including the VA loan’s funding fee. A maximum of two discount points may be rolled into the loan. If you pay more than two discount points, the remainder must be paid in cash. But by deferring two mortgage payments, receiving an escrow refund, and the savings per month your breakeven on the streamline is typically realized quickly.
Can I subordinate a 2nd mortgage?
Yes, you are allowed to subordinate a 2nd mortgage and just pay off your current VA loan as long as the lien holder will allow it.
Is there a loan limit to how much I can cash out?
No, you can cash out up to the full 90% of the appraised value or can cash out less if you choose without penalty.
