VA Interest Rate Reduction Refinance Loan (IRRRL)
VA Interest Rate Reduction Refinance Loan (IRRRL) lowers your interest rate by refinancing your existing VA home loan. By obtaining a lower interest rate, your monthly mortgage payment should decrease. You can also refinance an adjustable rate mortgage (ARM) into a fixed rate.
• No appraisal or credit underwriting package is required when applying for an IRRRL.
• A VA Interest Rate Reduction Refinance Loan may be done with “no money out of pocket” by including all costs in the new loan or by making the new loan at an interest rate high enough to enable the lender to pay the costs.
• When refinancing from an existing VA Interest Rate Reduction Refinance Loan to a fixed rate loan, the interest rate may increase.
• No lender is required to give you an VA Interest Rate Reduction Refinance Loan, however, any VA lender of your choosing may process your application for an IRRRL.
• Veterans are strongly urged to contact several lenders because terms may vary.
• You may NOT receive any cash from the loan proceeds.
A VA Interest Rate Reduction Refinance Loan can only be made to refinance a property on which you have already used your VA loan eligibility. It must be a VA to VA refinance, and it will reuse the entitlement you originally used.
• A Certificate of Eligibility (COE) is not required. If you have your Certificate of Eligibility, take it to the lender to show the prior use of your entitlement.
• No loan other than the existing VA loan may be paid from the proceeds of an IRRRL. If you have a second mortgage, the holder must agree to subordinate that lien so that your new VA loan will be a first mortgage.
• You may have used your entitlement by obtaining a VA loan when you bought your house, or by substituting your eligibility for that of the seller, if you assumed the loan.
• The occupancy requirement for an VA Interest Rate Reduction Refinance Loan is different from other VA loans. For an IRRRL you need only certify that you previously occupied the home.
A new Certificate of Eligibility (COE) is not required. You may take your Certificate of Eligibility to show the prior use of your entitlement or your lender may use our e-mail confirmation procedure in lieu of a certificate of eligibility.
VA does not set a cap on how much you can borrow to finance your home. However, there are limits on the amount of liability VA can assume, which usually affects the amount of money an institution will lend you. The loan limits are the amount a qualified Veteran with full entitlement may be able to borrow without making a down payment. These loan limits vary by county, since the value of a house depends in part on its location. The basic entitlement available to each eligible Veteran is $36,000. Lenders will generally loan up to four times a Veteran’s available entitlement without a down payment, provided the Veteran is income and credit qualified and the property appraises for the asking price. See Loan Limits for more information about the limits in your county.
VA Funding Fee
Generally, all Veterans using the VA Home Loan Guaranty benefit must pay a funding fee. This reduces the loan’s cost to taxpayers considering that a VA loan requires no down payment and has no monthly mortgage insurance. The funding fee is a percentage of the loan amount which varies based on the type of loan and your military category, if you are a first-time or subsequent loan user, and whether you make a down payment. You have the option to finance the VA funding fee or pay it in cash, but the funding fee must be paid at closing time. You do not have to pay the fee if you are a: • Veteran receiving VA compensation for a service-connected disability, OR
• Veteran who would be entitled to receive compensation for a service-connected disability if you did not receive retirement or active duty pay, OR
• Surviving spouse of a Veteran who died in service or from a service-connected disability. The funding fee for second time users who do not make a down payment is slightly higher. Also, National Guard and Reserve Veterans pay a slightly higher funding fee percentage. See Loan Fees for more information about loan costs. Some lenders offer VA Interest Rate Reduction Refinance Loans as an opportunity to reduce the term of your loan from 30 years to 15 years. While this can save you money in interest over the life of the loan, you may see a very large increase in your monthly payment if the reduction in the interest rate is not at least one percent (two percent is better). Beware: It could be a bigger increase than you can afford.
Call us today for details at 424 225 2167 for help. One of our mortgage professionals will help you get the best possible VA Interest Rate Reduction Refinance Loan solution for your situation. We’ll be with you every step of the process and not hand you off to someone else.
VA Interest Rate Reduction Refinance Loan (IRRRL)
This section is going to take a comprehensive look at what are known as VA IRRL’s, or Interest Rate Reduction Refinance Loan’s. First, we’re going to take a look at what exactly the loan is all about before we go on to discuss the various eligibility criteria. It’s important to have some degree of these criteria because if you don’t familiarise yourself with them then you run the risk of wasting both your time and that of the provider. Once this eligibility phase is evaluated, we’ll then go on to discuss the application process, loan limits, before concluding with the VA funding fee. In summary, this article aims to introduce you to the fundamental concepts behind the VA IRRRL and what you need to know. The VA Interest Rate Reduction Refinance Loan, also referred to as “streamline” or “VA to VA”, operates by lowering your interest rate via refinancing your current VA home loan. It really is that simple. What this means is that you can obtain a lower interest rate which in turn lowers your monthly mortgage repayments. Thus, this can act as an important mechanism by which those eligible can avail of refinancing their existing situation. It’s also worth noticing that the VA Interest Rate Reduction Refinance Loan can also be employed to readjust existing rates. In other words, the scheme permits refinancing an adjustable rate mortgage (ARM) into a fixed rate mortgage. Thus, at the outset, we can appreciate the value that this mechanism can bring to those eligible. So what do you know about VA Interest Rate Reduction Refinance Loan, well, let’s take a look and summarise some of its main components and features:
- You’re not permitted to receive any form of cash from the proceeding of the loan.
- Due to the differences among the terms of agreement, the veterans themselves are recommended to “shop around” in order to obtain the best deal.
- It’s important to note that no lender is absolutely required to provide you with an VA Interest Rate Reduction Refinance Loan but that a lender of your choice may process the application for you.
- Keep an eye on interest rates – this is particularly true when it comes to cases where you’re refinancing from an adjustable rate mortgage to a fixed rate mortgage.
- The flexibility of the VA Interest Rate Reduction Refinance Loan means that all expenses can be incorporated into the new loan. Alternatively, it’s possible to raise the interest rate to a level sufficient to allow the lender to pay any existing costs.
- When applying for the VA Interest Rate Reduction Refinance Loan, note that you don’t require an appraisal or an underwriting package.
So, as we can see, there are numerous factors that one needs to take into consideration when applying for the VA Interest Rate Reduction Refinance Loan. However, now that we have some sort of understanding of what it is and how it operated, let’s take a further look into whom exactly is eligible for this scheme? At the outset, it’s crucial to know that the IRRRL itself can only be employed to refinance an existing property for which you’ve already utilised your VA loan eligibility. You can see why it’s sometimes referred to as a “VA to VA” loan now! Let’s take a look at what is and what is not required when applying for this scheme:
- In contrast to other VA loans, the VA Interest Rate Reduction Refinance Loan has a different occupancy requirement. It’s important to know that you only need to show that you have been a prior occupant.
- A COE (Certificate of Eligibility) does not need to be presented.
- No loan other than the current VA loan can be paid with the results of the VA Interest Rate Reduction Refinance Loan.
The limits of the loan are dependent upon a number of factors, including the location in which you seek to apply. The standard available entitlement to veterans is approximately $36,000. Experts suggest that lenders are willing to pay up to four times the amount of the standard entitlement without requiring a down payment in the first place. Given that the VA loan needs no down payment and has no monthly mortgage insurance, a fee is imposed, which has the effect of minimising the effect to tax payers. This fee is variable and is dependent upon factors such as the loan amount. However, certain groups of people are exempt from paying this fee, these include:
- The spouse of a veteran who has died due to service.
- The veteran who has been inflicted with a service-related disability.
- The veteran who is in receipt of compensation for a service-related disability.
This article has aimed to provide some sort of foundational framework to describe the VA Interest Rate Reduction Refinance Loan. We first explained what the scheme is used for and then went on to discuss some common attributes of the system that are worthwhile to keep in mind. In addition, we highlighted the intricacies of the system and how the reader must always take into consideration the exceptions to each part of the scheme. This was evident both in eligibility as well as payment of fees. Nonetheless, hopefully this article has served its role in enlightening you that little bit better about our VA Interest Rate Reduction Refinance Loan.
Call us today at 424 225 2167 for details. One of our mortgage professionals will help you get the best possible VA Interest Rate Reduction Refinance Loan solution for your situation. We’ll be with you every step of the process and not hand you off to someone else.