Refinancing
Learn About VA IRRRL Refinancing
What Is a VA IRRRL?
A VA IRRRL (Veteran Affairs Interest Rate Reduction Refinance) is also referred to as a VA Streamline Refinance, and the terms are often used interchangeably. Lenders use the term “streamline” to imply that the process is faster and more simple for Veterans or active military only.
How Does It Work?
The VA will only allow you to take advantage of a VA Streamline refinance of your loan if the new terms provide you with an immediate financial benefit, such as a lower interest rate or lower monthly payment. You cannot refinance just because you do not like your current provider or any reason that does not directly relate to helping you in your finances.
VA Streamline Refinance Pros
- No Appraisal is Needed. We call it streamline for a reason!
- Lower interest rate: The most common reason why veterans and their family
members refinance their VA loans is that they need a lower interest rate. - Lower monthly payments: When it comes to how refinancing works with a VA
Streamline, your monthly payments often decrease. Lower monthly payments may result from an extended-term on the loan, which allows more time to pay on your mortgage. A lower interest rate could also result in a lower monthly payment if the length of the loan is held equal. - Lower funding fee: Instead of mortgage insurance, VA loans have a funding fee that can either be paid at closing, offset with a lender-paid credit, covered by seller concessions (where a seller agrees to pay partial closing costs), or added to the loan balance.
- Potential change in mortgage structure: As a reminder, refinancing with a VA Streamline could allow you to move from an adjustable-rate mortgage to a fixed-rate loan. ARMs change over time, depending on rate fluctuations. Fixed-rate mortgages lock in a single interest rate until you pay off your mortgage.
VA Streamline Refinance Cons
- Only applicable to your current home: You may change mortgage lenders or your mortgage specifics, not your actual property. This means you can’t switch this loan into a new property; it must be refinanced into the property you already own.
- Eligibility: To qualify for a VA Streamline, you must have a VA loan, to begin with. Closing costs: With closing costs also comes VA IRRRL funding fees. A borrower can choose to roll over these costs into their new loan balance, which means they’ll still be paying for them with interest on top.
- Mortgage length: VA loan refinancing is flexible. There is no rule that you must extend your mortgage. But, depending on the situation, you might end up with a longer mortgage length. This could be a negative for some borrowers.
It is important to note that you need to wait 270 days from the closing of your original mortgage to apply for a VA Streamline. You also must have made six consecutive monthly payments on your loan, and there must be 210 days between your first mortgage payment and the closing on the VA Streamline.
I have more questions!
Types of Mortage Refinancing
Contact a loan officer today, and we can help you break it down to see if this is a good option for you!
Ray Ochoa
Senior Loan Officer
Bill Craft
Sales Manager
NMLS 1621885
State Lic: AZ LO-0942496, CA-DBO01621885, MLO-54015VA
PHONE: (928) 366-1639
PHONE: (928) 247-9089
Rosa Castillo
Senior Loan Officer
