VA Streamline Refinance (IRRRL)
The VA Streamline Refinance, or Interest Rate Reduction Refinance Loan (IRRRL) is a great option for veterans or active-duty personnel who have an existing VA loan and would like to refinance into a lower interest rate and lower their monthly mortgage payment. A VA Streamline Refinance can also be used to shorten the loan term or to switch from an adjustable interest rate to a fixed interest rate loan.
VA Streamline Refinancing Benefits
There are several benefits to using an IRRRL (sometimes referred to as a "VA to VA" loan) to refinance an existing VA mortgage. Among these benefits is little to no out-of-pocket costs and in some cases there is no requirement for another appraisal of the property. In addition, there is no need for the veteran to obtain another Certificate of Eligibility (COE).
It's important to note that the Veteran home owner is not required to use the same lender that they used initially to purchase their home. We offer highly competitive rates and first-class customer service to our veterans and active-duty personnel.
VA Streamline Refinance and the VA Funding Fee (VAFF)
The proceeds from the VA Funding Fee are paid directly to the Department of Veterans Affairs and are used to help offset the losses to the Veteran's Administration on loans that go into default. This not only ensures that the VA Home Loan program can continue, it also reduces the cost to taxpayers. Borrowers can pay the fee upfront, or roll it into the loan.
All veterans are required to pay the VA Funding Fee. However, veterans receiving disability compensation from the VA for service-related medical issues, or spouses of veterans who were killed in the line of duty are also exempt from the fee.
As an added bonus, the funding fee for an IRRRL is less than the funding fee for a typical VA purchase or a VA Cash-Out refinance.
In addition, you may notice that the VA Funding Fee for a VA Streamline Refinance is the same regardless of the military branch served or first time or any subsequent use. Veterans who are not exempt will pay a 0.5% funding fee to refinance a single family residence. This cost can be rolled into the new loan.
The following table shows the the funding fee percentage for an IRRRL along with the funding fee for the purchase of a manufactured home and a VA assumption, for comparison purposes.
All Military Personal, National Guard, and Reserves:
| Loan Type | Fee (First-time use) | Fee (Subsequent use) |
|---|---|---|
| IRRRL | 0.50% | 0.50% |
| Mobile Home | 1.00% | 1.00% |
| Assumptions | 0.50% | 0.50% |
VA Streamline Refinance Requirements
There are some requirements to be aware of when using an IRRRL to refinance an existing VA mortgage. The following list explains the guidelines and requirements for a VA Streamline Refinance...
- Cannot refinance for more than you owe on your current loan (no cash back). However, any associated closing costs can be rolled into the new loan, with no cash out-of-pocket.
- Your existing mortgage must be a VA mortgage. An IRRRL is not available to veterans who currently have a non-VA loan.
- Your home can be your primary residence, second home or investment property. You must certify that you occupy the property or you previoulsy occupied the property.
Generally, the VA will want ensure that there is a "net tangible benefit" to the veteran borrower when refinancing with an IRRRL. This is to insure that veterans aren't taken advantage of by unscrupulous lenders. The VA underwriter will require that the refinance results in a lower principal and interest payment. There are some exceptions to this rule however, as when the veteran is...
- Refinancing to shorten the loan term
- Refinancing to switch from an adjustable rate loan to a fixed interest rate loan, or
- Using an IRRRL to finance qualified energy efficient improvements into the new loan
Finally, the veteran does not need to occupy the home as their primary residence. An IRRRL only requires that the veteran previously occupied the home.
Additional Lender Requirements for a VA Streamline Refinance
There are other things to be mindful of when considering a VA Streamline Refinance. Lenders, for example, may have their own requirements as to how long you've had your VA mortgage, how many payments you've made and whether or not you've had any 30-day or more late payements.
Texas Veterans Home Loans requires that you have no 30-day late payments in the past twelve months on the mortgage you are refinancing.
Remember also that the borrower cannot take cash out of their equity with an IRRRL. The VA has another loan product for this purpose - the VA Cash-Out Refinance. See an important note below regarding VA Cash-Out Refinances in the State of Texas.
Due to strict home equity laws in the State of Texas, borrowers cannot take cash out of their home equity with a VA loan. The good news is however, homeowners refinancing from a Conventional loan or other type of loan into a VA loan are not required to take any cash out and they can still realize the benefits of a Conventional to VA Refinance, or 'Non-VA to VA' refinance.
Ready to get started? Call and speak to one of our VA loan specialists today. The toll-free number is 866-704-2826. You can also complete our safe, secure online request form and a member of our staff will contact you right away to discuss your options. We welcome the opportunity to assist you.
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Get Started Today With Your VA Loan Request!
To find out more about a Texas VA Streamline Refinance, or to speak with a loan professional about the prequalification process, please call our toll-free number at 866-704-2826 or click on the button below and complete our quick-and-easy online form and a member of our staff will contact you right away to discuss your options.
We welcome the opportunity to assist you.
