If you read my last post regarding VA refinancing, you are already aware that there are essentially two main types of refinance loans for veterans. I am wanting to focus on the VA streamline or Interest Rate Reduction Loan (IRRL) for this post.

Why would a veteran want to do a streamline refinance?

The most simple and straight forward answer is because the interest rates being offered now are lower than when the veteran purchased the home or refinanced last. If a veteran had purchased a home in 2004, it is likely the interest rate at that time would have been somewhere between 6.25% to 7.0%. Interest rates offered to veterans at this time are closer to 4.5% to 5%. When I was a loan officer I would be amazed at how many people had no idea how much a small drop in their interest rate could save them. I recall one conversation where I was told, “unless I can drop at least 3% points, then it is not worth refinancing.” Attention please veterans reading this blog; DO NOT make that same mistake. The general rule of thumb is that a 1% decrease in your interest rate will normally be worth your while.

How do you get started with a VA streamline refinance?

The most important thing to do prior to contacting a VA approved mortgage lender or bank, is to prepare yourself for the conversation that will take place once you contact your VA mortgage company or lender of choice. Here is a checklist of information or documentation you should gather, prior to contacting a lender:

Gather this information – Step 1

1. Your current monthly mortgage statement. This could be a statement that you get monthly in the mail or you can print current loan details off the lenders web page.
2. Your Mortgage Note. The mortgage NOTE, will normally be found in the binder or folder of information you received when you closed on your home or last refinance. In large bold letters at the top of this document it will say NOTE: NOTICE THIS LOAN IS NOT ASSUMABLE…..
3. Your home owners insurance information. This could be the Declarations Page or just your agent’s contact info, but you will need to have this information available.
4. Survey of property. If you live in TX, FL or OH you may be required to have a survey.

Contact an approved VA lender or bank – Step 2

It is important to understand that the Department of Veteran’s Affairs (VA) does not lend money. The VA approves or authorizes mortgage companies, that have fulfilled certain criteria, to make loans to veterans. Each approved or authorized VA lender will be given a VA LENDER ID # from the VA. Make sure to ask whoever you decide to use for their VA ID number. The internet is a great way to find approved VA lenders and as you may be aware from reading this blog, we are confident in Flagship Financial Group and their ability to get you approved for a VA streamline loan.

I look forward to sharing more insights into the VA streamline loan on my next post. Veterans, thanks for your dedicated service!

With interest rates at all time lows, many home owners today are found wondering if a refinance is something that would benefit them and/or if they are even eligible to refinance in today’s crazy housing and credit markets. Here at LowVARates.com we make it our goal to shed light into some of the most pressing concerns and topics of high importance among our nation’s military and VA home owners.

Why should a veteran refinance?

• There are numerous reasons for which someone might want to refinance but here is a list of the most common
• Lower your interest rate
• Lower your monthly payment
• Shorten your term or pay off home faster
• Pay off consumer debt
• Do home improvements

Veteran home owners need to understand that when trying to refinance a VA home loan, there are two primary questions that must be answered in order to first determine what kind of refinance makes the most sense. 1. Do you currently have a VA mortgage on your home? 2. Do you want to do home improvements, pay off debt, or take cash out of your equity? If you answered “yes” to #1 and #2 then you will be taking part in a VA cash-out loan. If you answered “no” to #1, and “no” to #2 you still will be doing a VA cash-out loan, even if you are not really taking out cash etc. If you answered “yes” to #1 and “no” to #2 then you are going to participate in the VA streamline refinance or the IRRRL.

What is a VA streamline or IRRRL?

This loan is the most popular loan among current VA home owners. The Interest Rate Reduction Refinance Loan (IRRRL) is a special government-endorsed refinance that eliminates all the red tape and difficulties that can normally arise with a normal refinance or a cash-out. In a nutshell, the theory from the VA and the mortgage lender is this; if you currently have a VA loan, then the Department of Veterans Affairs does not require you to re-qualify to simply lower your payment, rate or term. Now on the other hand, if you had been approved for a loan a few years back when you bought your home, and now you want to build an addition onto your home, then the VA would require you to get approved again, even if the interest rate is lower, because you are taking on additional debt, and the VA and the mortgage lender need to make sure you can afford that new responsibility. The VA streamline or IRRRL will normally carry out the following benefits to the VA home owner. Benefits of a VA streamline refinance are:

• Immediate payment reduction from the lower interest rate
• Ability to pay off your home years faster with no extra money
• You may be able to postpone or defer your next two mortgage payments
• Most veterans will get a cash refund of their current escrow account

Future posts will get into more of the details on this unique program for veterans.