VA loans are a special loan program designed specifically for veterans, issued by approved lenders, and guaranteed by the federal government. The VA Streamline Refinance is the most common loan type within the VA loan umbrella, and is officially known as an Interest Rate Reduction Refinance Loan (IRRRL).
VA loan closing costs can be rolled into the cost of the loan, allowing veterans to refinance with no out-of-pocket expenses. Sometimes it is also possible for the lender to take the brunt of the cost in exchange for a higher interest rate on your loan.
The Time is Right!
VA streamline loans no longer need a home appraisal or 620 FICO scores! Perhaps you have tried and failed to get a VA streamline in the past. Don’t let that derail your efforts today—this is a different financial landscape than even a year ago. Apply again now.
To qualify for a VA Streamline loan, you must meet the following requirements:
- Be current on your mortgage with no more than one 30-day late payment within the past year.
- Your new monthly payment for the IRRRL must also be lower than the previous loan’s monthly payment. (This condition does not apply is if you refinance an ARM to a fixed rate mortgage.)
- You must not receive any cash from the IRRRL.
- You must certify that you previously occupied the property.
- You must have previously used your VA Loan eligibility on the property you intend to refinance. (You may see this referred to as a VA to VA refinance.)
Interest rates are still in a range that should be considered “the chance of a lifetime.” That is not just exaggerated talk. Historically, VA interest rates are in a range that should motivate every veteran to look more closely into a VA mortgage loan or a refinance.
Fixed interest rates are still very attractive for long-term loans. But before you limit your thinking, you should also consider the amount of time you plan on being in your home. If you’re only going to be in your home for a few more years, it may make sense not to refinance out of your ARM. If you’re going to be in your home less than seven years, it might be a smart move to refinance to an ARM loan.
A drop of just one half to three quarters of a percentage point in interest can lower your monthly payment. If you don’t refinance, you may be paying too much every month for your loan, and that’s never a good financial move. There are a couple of different ways you can lower your monthly mortgage payment.
- You can simply refinance to a lower interest rate. A lower rate generally means a lower monthly payment.
- You can change the term of your mortgage. For instance, if you have a 15-year mortgage, you can lengthen the term to 30 years. Since the balance of your mortgage is spread out over a longer period of time, your payment is lower. However, if you have a 30-year mortgage and one of your financial goals is long-term savings, you may want to consider shortening your term to 20 or even 15 years. Your payment will be higher, but you will pay much less in interest over the life of the loan, saving you thousands of dollars in the long run.
Remember, the VA streamline refinance loan (IRRL) lowers your interest rate by refinancing your existing VA home loan. By obtaining a lower interest rate, your monthly mortgage payment should decrease. Now that’s some good financial news. Act on it!