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Commonly referred to as the VA streamline refinance, the Interest Rate Reduction Refinance Loan, or IRRRL, is one of the simplest of all mortgage loans available. Offered to veterans who are currently in a VA loan, the VA streamline refinance allows borrowers to lower their monthly payments and the interest rate of their mortgage without many of the requirements of a traditional refinance. There is no need for an appraisal, and some lenders do not even require a credit score. Because of the decrease in requirements a VA streamline refinance can often close much faster, sometimes as little as 3-4 weeks.
A VA streamline refinance is without a doubt the best mortgage refinance loan on the market. Absolutely no other refinance loan program is as simple and easy to qualify for. A VA streamline refinance program is a government backed mortgage loan for active duty and prior service veterans who already have an existing VA loan. It provides you a fast, simple and hassle free way to refinance your current VA home loan so that you can take advantage of lower interest rates. Credit qualifying with some lenders is not required. This means that even if you have bad credit, as long as you have not had more than 1 thirty day late mortgage payment in the last 12 months, you may still be eligible for a VA streamline refinance. Not only is credit qualifying not required for the VA streamline refinance program but income documentation, job verification and appraisals are not required either. What could be easier! And to add icing on the cake, VA even allows you to rollover $6000 into the loan amount for energy efficient improvements to your home with a VA streamline refinance.
When can I use a VA streamline refinance?
A VA streamline refinance can be made by a VA-approved lender only if a VA borrower has already used his or her eligibility for a VA loan on the property intended for refinance. In other words, it must be a VA to VA refinance, and the VA borrower’s entitlement will be “reused” for the VA Streamline refinance. Though the borrower need not obtain another Certificate of Eligibility, he or she will most likely be required to show the lender the Certificate used on the first VA loan to prove how much entitlement was used; therefore, the lender will know how much entitlement will be reused for the VA Streamline refinance. In some cases, entitlement may have been substituted for that of the seller if the VA loan was assumed. In any case, it’s good to have the original Certificate of Eligibility to show how much entitlement the borrower will be reusing.
Do I have to live in the home I am refinancing?
VA loans require borrower occupancy when they are made. The occupancy requirement for VA streamline refinance is different from other VA loans. When the borrower originally aquired the VA loan for the property being considered for the VA Streamline refinance, he or she certified that it would be borrower occupied. For a VA streamline refinance, the borrower need only certify that he or she previously occupied it.
Will I have to bring any money to closing?
No. A VA Streamline refinance loan may exceed the sum of the outstanding balance on the existing VA loan. The VA funding fee and closing costs may also be rolled into the loan, as well as any other allowable fees and up to two discount points. This creates a situation for the veteran where the borrower should not need to bring money to closing on a VA streamline refinance.
So how much will I be rolling into my loan?
If you choose to roll in all the costs into a VA streamline refinance it can raise the balance significantly. Items that you can roll into a VA streamline refinance are: Escrow prepaids, Origination charges, Discount points, title fees, and the VA funding fee. Prepaid escrows are the funds required to bring your new escrow account current. This allows the escrow refund after closing of your VA streamline refinance to be used as you please. It also insures that when they property taxes are due that the funds will be readily available. Origination charges are the commissions paid to the loan officer for originating the VA streamline refinance. Discount points are paid to the lender to purchase a lower interest rate. Title fees are charged by the title company for title insurance and other fees associated with the legal recording of the mortgage. The VA funding fee is charged on all VA streamline refinances at a cost of 0.5% of the loan amount. As most of these fees are based on the amount of the VA streamline refinance mortgage it is impossible to accurately say what the total of fees are.