The VA IRRRL
For those who already have a VA loan, there is now the VA Interest Rate Reduction Refinance Loan (IRRRL) which can lower your mortgage rate with very little paperwork and documentation. It is also known as the VA Streamline Refinance. The IRRRL eliminates the usual aspects of a refinance, including credit checks, income verification, and employment requirements.
Instead, the program relies on the original loan’s payment history as a measure of credit-worthiness. If your mortgage payments have been on time for the last 12 months, and your new rate would be lower, then most likely you will qualify for the VA IRRRL. Because VA mortgage rates normally run 30 basis points (0.30%) below conventional rates, reducing your rate may be simpler than you expect.
VA mortgage rates are currently at historical lows.
Anatomy of a VA Streamline Refinance
The VA Interest Rate Reduction Refinance Loan (IRRRL) is exclusively for those with current VA home loans. The VA interest rate refinance loan can be used on a primary or second residence. A vacation home qualifies if the home was once a primary residence. VA loans are limited to military borrowers who have a veteran status of honorable discharge. You can get your letter of eligibility online.
The Department of Veterans Affairs defines military borrowers as those in good standing who have served at least 181 days during peacetime, 90 days during wartime, or 6 years in the Reserves or National Guard. Many surviving spouses of service members killed in the line of duty are also eligible. VA loans require no money down, no mortgage insurance, and only below-average credit scores to get approved.
VA mortgage rates are cheaper than FHA and conventional loans. Interest rates on a VA Streamline Refinance loan are often one-eighth of a percentage point lower than an FHA loan; and up to three-eighths lower than a conventional loan.
How to Qualify for the VA IRRRL
The VA Interest Rate Reduction Refinance Loan is a special benefit to homeowners with existing VA financing. Therefore, veterans should find it online at eBenefits, the portal for the Veterans Benefits Administration.
Sometimes called the VA Streamline Refinance, the IRRRL program lets homeowners refinance to lower mortgage rates with very little hassle, often within 30 days.
The IRRRL’s eligibility criteria and guidelines is as follows:
- Your current mortgage loan must be a VA loan
- You must be current and on-time with your mortgage for the past 12 months
- You may not receive “cash out” as part of the refinance
- You must certify that the home is or was your primary residence
After the refinance, your new mortgage payment must be lower than your current monthly payment. There is only one exception to this rule, when you are refinancing an ARM into a fixed-rate loan. There are only a few steps in the approval process. With a VA Streamline Refinance loan, lenders are not required to perform credit score verification, income documentation verification, or current employment checks.
Home appraisals are not required with a VA Streamline Refinance loan, regardless of your home’s value.
Apply for a VA refinance with any mortgage lender based in the United States. As an honorably discharged veteran or active military member in good standing, you deserve it!