What is VA IRRRL?
The VA IRRRL is an easy method to refinance your existing VA loan into one with a reduced interest rate and monthly payment.
IRRRL is the abbreviation for “VA Interest Rate Reduction Refinancing Loan.” This lending scheme is known as a VA-to-VA refinance and the VA Streamline Refinance.
With the VA IRRRL, fewer documents are required (no credit, income, or employment verification), and an appraisal may not be necessary. Additionally, closing expenses are often reduced and can be financed to minimize up-front fees.
Today’s VA IRRRL Rates
VA IRRRL mortgage rates are among the most competitive on the market. The Department of Veterans Affairs guarantees these loans, allowing lenders to provide unusually low-interest rates.
The current beginning rate for a 30-year VA IRRRL is 5.75 percent (5.96 percent APR), per our lender network*.
VA refinancing rates vary based on the borrower. Depending on your loan amount, credit score, loan-to-value ratio, and other criteria, your interest rate will likely be higher or lower than average.
How the VA IRRRL Functions
The VA IRRRL program, like any other mortgage refinancing, replaces your old mortgage with a new loan. The new loan begins with either 30 or 15 years depending on the loan period.
However, the procedure for a VA Streamline Refinance differs slightly from a conventional refinance.
Because no income, employment, or credit verification is necessary, borrowers have less paperwork to complete. And there is no requirement for a new Certificate of Eligibility (COE), as the IRRRL can only be applied to an existing VA loan. So the lender already knows that you are eligible for a VA loan.
Lastly, there is no home evaluation. This can reduce underwriting time by a week or more; thus, VA Streamline loans often conclude faster than other refinances.
Is the VA IRRRL Program Worth It?
Like any other refinance, the VA IRRRL results in a brand-new loan. Consequently, your mortgage will begin again at 30 or 15 years, depending on your selected loan period.
However, utilizing the VA IRRRL is beneficial for many homeowners. This is because today’s ultra-low VA interest rates can result in a considerably cheaper monthly payment and possibly save you hundreds of dollars in interest payments over time.
Another huge benefit? Closing fees for VA loans can be financed. This permits refinancing with minimal or no out-of-pocket costs. In exchange for a higher interest rate on a loan, it is often feasible for the lender to absorb your loan charges.
The Advantages of the VA Streamline Refinance
The VA IRRRL allows veterans and military members to refinance their existing home loans into one with a reduced interest rate and monthly payment.
Compared to alternative refinancing options, the VA Streamline program offers the following advantages:
- Limited documentation
- Low-interest rates
- No private mortgage insurance (PMI)
- Typically appraisal isn’t needed
- Possibility of refinancing with little or no equity
- There may be little or no closing fees
- A good credit score will ensure qualification.
- Available to the majority of veterans and active-duty members of all armed services branches, including a significant number of Reserve and National Guard personnel.
The VA Streamline loan program is quite popular due to its simplicity.
If you currently have a VA-backed mortgage on your house, the IRRRL program makes refinancing to a reduced interest rate reasonably easy and quick.
However, lenders are free to establish their own credit checks and evaluations criteria. To bypass these stages, you must shop around and inquire about lenders’ rules before submitting an application.
VA IRRRL Guidelines
Your existing mortgage must be a VA loan to be eligible for a VA Streamline Refinance (IRRRL). Department of Veterans Affairs underwriting standards must also be met by homeowners.
Current IRRRL guidelines include the following:
- You are current on your payments, with up to one 30-day late payment in the previous 12 months.
- Your new rate and monthly payment for the IRRRL must be lower than the monthly payment on your old loan. This criterion only does not apply if you convert an adjustable-rate mortgage into a fixed-rate mortgage.
- You are prohibited from receiving cash from the IRRRL.
- You must attest that you presently or have inhabited the property.
- You must have utilized your VA Loan eligibility on the home you wish to refinance in the past. This might be referred to as VA-to-VA refinancing.
You may determine if you fulfill the VA IRRRL requirements by contacting your existing mortgage lender or any other lender authorized to provide VA loans (most are).
VA IRRRL Lenders
When doing a VA Streamline Refinance, it pays to look around for the best lender because not all lenders have the same regulations.
For instance, some lenders need clearance of credit and income, but the VA does not. And interest rates vary significantly between companies. Consequently, depending on whatever lender you pick, you may need access to the complete array of VA IRRRL advantages.
VA Cash-Out Refinance vs. VA Streamline Refinance
Homeowners are generally not permitted to receive payment under the VA IRRRL program. One exception: IRRRL customers who intend to make energy-efficient home upgrades may get up to $6,000 in cash back.
There is a VA cash-out refinancing loan for all others.
A cash-out refinance allows homeowners to refinance their existing loan at a cheaper interest rate while simultaneously extracting cash from their home’s equity. This replaces your current mortgage, unlike a home equity loan which is merely a cash withdrawal.
In rare instances, a qualifying borrower can refinance up to 100 percent of the home’s worth (100 percent LTV) utilizing a VA loan. Another advantage is that the VA cash-out refinance can be used regardless of the type of loan you currently have, be it VA, USDA, FHA, or conventional.
Like the VA Streamline Refinance loan, the home must be the owner’s primary residence. There is no minimum number of years you must have owned your house, but you must have sufficient equity to qualify for the loan.
VA IRRRL FAQ
What Does the IRRRL Cost?
Similar to other VA loans, the closing expenses for a VA Streamline Refinance range between 1 and 3 percent of the loan amount. Loan origination fees may not exceed one percent of the loan’s value. However, you can forego the house evaluation, saving between $500 and $1,000. In addition, borrowers must pay a financing fee of 0.5%, or $500, for every $100,000 borrowed. This might be added to the loan amount to avoid an upfront payment.
Who Offers the Lowest VA Refinancing Rates?
The Department of Veterans Affairs has no authority over VA mortgage rates. Instead, they are determined by the private lenders that provide these loans. This implies that VA refinancing rates vary significantly amongst lenders. Each borrower has a unique interest rate, so you must browse for the best deal. Compare the customized offers of at least three to five lenders to choose the best offer.
How Often May the VA IRRRL Be Used?
There is no maximum number of times you may utilize the IRRRL program, so long as you wait the requisite 210 days between each refinancing and each one provides a ‘net tangible advantage’ (lowering your interest rate and monthly payment significantly). Refinancing incurs closing expenses and resets your loan, so utilizing the IRRRL repeatedly is impractical for most homeowners.
How Long Does It Take To Get an IRRRL?
The time required to refinance using an IRRRL varies significantly based on the borrower and lender. If everything goes properly, a VA IRRRL might close faster than most refinances in less than a month. However, a lengthy loan application or a busy loan officer might slow the procedure.
Can Cash Be Withdrawn With a VA IRRRL?
Only under exceptional conditions. You may get up to $6,000 in cash at the closure of your IRRRL. The money MUST be utilized for energy-efficiency upgrades and must be reimbursed for upgrades performed within 90 days before closure. Some VA borrowers will also earn cashback if their pre-paid taxes and insurance on a prior loan and a portion of those funds were not utilized.
Who Is Eligible for an IRRRL?
To be eligible for a VA IRRRL, you must have an open VA loan for at least seven months (210 days). Additionally, you must be current on your mortgage payments, and the new loan must be financially advantageous. Since the IRRRL is a simplified refinance method, lenders are not required to verify your credit score, although some do so regardless.
When May I Do a VA IRRRL?
Before using the VA Streamline Refinance, you must wait seven months (210 days) after the conclusion of your previous loan. However, some VA-approved lenders impose their 12-month waiting period. If your current lender thinks seven months is too soon to refinance your VA loan, it may be worthwhile to seek a new lender that may allow you to refinance earlier.
Can a Spouse Be Removed Through the VA IRRRL?
Generally, the same borrower(s) must be committed to both the initial VA loan and the refinancing loan. There are, however, a few exceptions, such as in the case of a divorce. An IRRRL is feasible in each of the situations listed below. Divorced veteran alone, a veteran with a different spouse, and surviving spouse alone due to the veteran’s passing. A divorced or different spouse cannot qualify for an IRRRL because the veteran has passed away.
What Paperwork Is Required for the VA IRRRL?
The VA does not demand a credit check or an assessment when using Streamline Refinancing. However, many lenders need a credit check and verification of work to ensure that you remain financially secure enough to pay your mortgage. Some lenders also demand a fresh appraisal; however, bypassing the appraisal is one of the most significant advantages of an IRRRL, so we advise you to look around if your lender requires one. Because the existing borrower has already been accepted for VA financing, no COE is necessary.
Does the IRRRL Charge for Funding?
Yes, a VA funding fee is required to fund a VA IRRRL. It represents 0.5% of the loan amount. When using the IRRRL, you can roll the financing cost into your loan, so you do not have to pay it in cash upfront. Remember that rolling the financing fee into your mortgage will incur interest charges throughout the loan term.
How Do I Waive My Funding Fee?
Only some VA borrowers qualify for the financing fee waiver. Included are veterans receiving disability compensation, surviving spouses of veterans who died from a service-connected disability, veterans entitled to receive VA compensation for a service-connected disability but who receive retirement pay or active duty pay, and active-duty service members who provide evidence of having been awarded the Purple Heart on or before the date of loan closing.
Can the Funding Fee Be Included in the Mortgage?
Yes, the VA permits the financing charge to be rolled into the mortgage loan amount rather than paid beforehand. Remember that this implies you will eventually pay interest on the financing cost.
Do I Have to Qualify for a Lower Interest Rate to Use Streamline Refinance?
If you are switching from one fixed-rate mortgage to another, the VA mandates that your IRRRL have a lower interest rate. The VA will enable you to refinance to a higher interest rate if you switch from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage.
What Is the Maximum Loan Size for a VA IRRRL?
There is no maximum loan amount for VA loans. Even enormous loan sizes are permitted, provided the borrower meets the requirements. However, a VA Streamline Refinance is restricted to the existing loan principal plus any outstanding late fines and late charges, along with regular loan expenses and the cost of any energy efficiency upgrades.
Can the VA Streamline Refinance Be Used to Refinance an Investment Property?
Yes, the VA Streamline Refinance can be used for investment properties. You must attest that the property was your principal residence in the past. However, you no longer need to reside there full-time to refinance.
Can I Purchase Discount Points to Reduce My Loan’s Interest Rate?
The VA does permit the purchase of discount points to obtain a cheaper mortgage rate. Just remember that only two discount points may be financed. Additional points demand a monetary payment in advance. Typically, discount points cost 1 percent of the loan amount and reduce interest rates by around 0.25 percent.
How Does Refinancing a VA Loan Work?
Obtain pre-approval to determine your eligibility for VA refinancing. Then, compare rates from many lenders. You are not required to refinance with your existing lender, and most borrowers may find an even cheaper interest rate and monthly payment by shopping around. After selecting a mortgage firm, you will submit your loan paperwork and get authorized. A VA Streamline Refinance needs less documentation than other loan types and may allow you to forego an assessment.
Check Today’s VA Refinancing Rates
The VA Streamline Refinance is one of the most convenient and quick mortgage options accessible to customers today. Check refinancing rates with top-rated and VA-approved lenders.