The VA streamline refinance is termed officially by the government as the Interest Rate Reduction Refinance Loan (IRRRL), and is sometimes nicknamed the VA-to-VA loan. This loan allows those qualified to refinance their mortgage in order to lower their interest rate. It’s also used to refinance an ARM (adjustable rate mortgage) into a fixed rate mortgage.
How Does The VA Streamline Refinance Work?
Once you’re approved, a VA streamline refinance is simple and easy to use. For one thing, a Certificate of Eligibility from the Department of Veterans Affairs is not required for an IRRRL, nor is a down payment. In many cases, appraising and credit underwriting won’t be required either, but this can vary from lender to lender.
While they certainly shorten and simplify the loan process, streamline loans do have their own requirements. These requirements make “net tangible benefit” a priority over simply making the loan originator rich. This means they are structured to improve the situation of homeowners, producing actual, tangible benefits.
Here are some examples of these requirements, or guidelines:
- To take out a VA streamline loan, you cannot be more than 30 days late on your current mortgage.
- No cash out is permitted.
- Many lenders have a minimum credit requirement, so it’s important to check with your lender about these specific requirements. Low VA Rates, however, does not have a set minimum credit score.
- Obviously, the new monthly payment must be lower than the original monthly payment, and the interest rate should decrease as well.
The IRRRL is done with “no money out-of-pocket,” so the new loan can include all new and original costs, including refinance costs. The loan can take as little as 10 days to close.
Who Qualifies for a VA Streamline?
Those who qualified for a VA loan will be able to refinance that original loan with an IRRRL. This is where the VA-to-VA nickname comes in.
If you have a second mortgage, you are required to make your new VA loan your first mortgage by having your holder subordinate the lien.
Like was mentioned earlier, being current on your mortgage at the time of refinancing is optimal. Delinquency could be a disqualifying factor depending on which VA loan lender you use.
Other Types of VA Refinance: The VA Cash-Out Refinance Loan
Cash-out refinancing is an option if you want to have some extra cash on hand for medical bills, schooling, and other major expenses. But it works differently than a streamline refinance.
Unlike the streamline refinance, the VA cash-out refinance will, if you have a second mortgage, allow you to combine both mortgages. In most cases, the cash-out loan from the VA will match 90 to 100 percent of the value of your home.
The funding fee for streamline refinancing is 0.5 percent while the cash-out fee is a little higher, around 3 percent. And although one of your mortgages may be 30 days delinquent or less with a streamline loan, cash-out does not allow any delinquency at all. Cash-out loans also require that the property be occupied at the time of refinancing while VA streamline loans do not.
The fact of the matter is that we at Low VA Rates offer the lowest mortgage rates and the most clear-cut refinancing available to our veterans. Interest rates are at an historic low and our clientele is stronger than ever. While it’s smart to shop around and compare vendors, we hope your shopping ends here with us: our passion for giving back to veterans is reflected in everything we do, from the easy, guided application process to our low APR guarantee. You deserve to work with a lender dedicated to ensuring you and your families get the best rates possible, and that’s precisely what we are. Get started on your refinance with us today.