So what is this VA Streamline Loan everyone’s talking about? And have you heard of the VA’s Interest Rate Reduction Refinancing Loan (IRRRL)? Interestingly, they are one in the same! This is a loan that refinances an existing VA Loan into a new VA Loan with a lower interest rate, or for some, from an adjustable rate mortgage (ARM) into a fixed rate mortgage. Differing from a typical VA loan, a Certificate of Eligibility is not required for this VA refinance. This is not a standard refinance by any means… a VA IRRRL/Streamline loan requires:
• NO – Appraisal
• NO – Credit Check
• NO – Credit Underwriting
• NO – Qualifying Debt Ratios
• NO – Income Verification
• NO – Face to Face Application
Sounds great doesn’t it? If your current primary residence is financed with a VA home loan, you should take advantage of the lowest interest rates in history and consider this streamlined refinancing. Let’s get started with the eligibility requirements specific to the VA IRRRL/Streamline loan:
• In order to use this program, the applicant must be refinancing an existing VA Loan into a new VA loan.
• The borrower needs to certify that this is an owner occupied property. The original VA loan contains a signed agreement stating the borrower(s) is the primary occupant of the home, and to apply for this loan, another agreement will be signed saying that you have been the primary occupant.
• There is no cash-out option. The Veteran cannot take more out on the new loan than what is currently owed. The loan can be more only as a result of fees and closing costs being financed.
• The VA does not require another credit check and appraisal since it has already approved the loan guarantee in the first place. Nevertheless, lenders usually require a credit check and appraisal to satisfy their stipulation that the borrowers are still credit worthy and the property still has a higher market value than their maximum loan amount.
• Since the borrower is refinancing a VA for a home loan guarantee, refinancing does not require a Certificate of Eligibility.
Sounds good so far. But are there fees associated with this VA IRRRL/Streamline loan? The VA only requires a 1.5% funding fee of the value of the new loan. There are no other fees associated with this loan. If a lender suggests the VA charges extra fees, contact the VA to see if something has recently changed and, if not, find a new lender. And remember, the VA allows financing of all closing costs associated with refinancing into the new mortgage. Although you can use your current lender, any mortgage lender on the VA-approved lender’s list can be consulted for the IRRRL/Streamline. Shop around for your refinancing loan. By going to several lenders, you can choose the best loan terms for you and your family. The VA has a long list of approved lenders, and you should shop around.
As a bonus, borrowers can include the cost of home improvements in the VA IRRRL/Streamline. Up to $6,000 in the refinancing loan can be used for the purpose of energy efficient home improvements. Unfortunately, other home improvements are not eligible.
Again, if you have a current VA Home Loan, consider a VA Refinance since rates have never been lower. Loan Star Financing can guide you through the steps of selecting the best refinance option for you and your family.