VA Streamline Refinance Program (IRRRL)
Commonly referred to as the VA Streamline Refinance, VA IRRRL or a VA Interest Rate Reduction Refinance Loan, this mortgage refinance program is offered by VA-approved lenders and "guaranteed" by the VA in case a borrower defaults on the loan. This is a popular refinance option for VA eligible borrowers due to the streamlined qualification process, limited out-of-pocket closing costs, and reduced paperwork compared to other loan programs.
- Lower interest rate and mortgage payment
- No out-of-pocket expenses
- You Do Not have to use your current lender
- You Do Not have to get a new Certificate of Eligibility
- No cash-out allowed, only a reduction of interest rate
- Primary residence OK, as long as you certify that you previously owned the property
VA Guaranteed Home Loans specializes in Kansas VA Streamline Refinances (IRRRL). We would be happy to answer any questions you have. Just contact one of our Kansas VA Loan Specialists at 888-664-9572. You may also fill out our quick VA Loan Eligibility form by CLICKING HERE, and we'll get in touch with you as soon as possible.
Streamline Refinance Explanation
The VA Interest Rate Reduction Refinance Loan (IRRRL) lowers your interest rate by refinancing your existing VA loan. You can also refinance an adjustable rate mortgage (ARM) into a fixed rate VA mortgage loan, which may increase your payment. Like many things in the military, there's a specific name and usually acronym for just about everything. Why should your VA loan options be any different? Streamline refinances are those that take place for just a simple rate reduction, which is why they're called an Interest Rate Reduction Refinance Loan (IRRRL).
If you have an existing VA loan and the interest rate you have on the loan isn't as low as current market rates, you might consider a VA IRRRL Streamline Refinance.
Refinancing with A VA Streamline IRRRL
VA eligible borrowers with existing VA loans can refinance their current VA mortgage to lower their monthly payment or to move from an Adjustable Rate Mortgage (ARM) to a fixed rate term. And before proceeding with a VA IRRRL, it's important to understand the program guidelines, constraints, and benefits.
VA Refinance Loans are unique because they have their own criteria for eligibility and underwriting guidelines that are set by the Veteran's Administration. In addition to those guidelines, there are other specific lending criteria set by the mortgage banks offering the VA loan. These guidelines vary from lender to lender, as they are not determined by the VA, but rather the lending institution that is actually providing the loan funds.
For example, while the VA does not require an appraisal in order to insure the new VA loan, in some cases the lender may require an appraisal based on the characteristics of the loan scenario.
To be eligible for the VA Streamline Refinance, the VA requires the new loan have an interest rate that is lower than the exiting loan. The exception to this rule is when the borrower is refinancing from an existing VA ARM loan to a VA fixed rate loan. In such situations, the interest rate may increase, because the fixed rate loan is considered to be a more favorable product. This is due to the fact that many Adjustable Rate Mortgages come with very low initial teaser rates that have a tendency to spike later in the term.
A Certificate of Eligibility is not required since the borrower was already approved for the initial VA mortgage. Your local Veteran Loan Specialist will have access to the VA email confirmation process to save time and paperwork.
Closing Costs on A Streamline Refinance IRRRL
Another benefit of getting a new VA Loan through the IRRRL Streamline Refinance Program is that the loan can be done with "no money out of pocket" by including all closing costs into the new loan. This is extremely helpful when considering the overall budget and savings for the new refinance.
One thing to keep in mind though when wrapping all of your closing costs into the new loan, which is done by taking a slightly higher interest rate and having the lender pay all of the fees, is that the new interest rate must be lower than your current rate according to the VA guidelines.
Program Change From Adjustable Rate to Fixed Rate
Considering the present position of the market, it may be beneficial for veterans with VA adjustable rate loans to refinance into a VA fixed rate loan. This can be done under the IRRRL program, even if the new rate is higher, since the fixed rate loan is more stable and secure compared to the more volatile adjustable rate loan. This was not always allowed under the VA IRRRL program. However, after many veterans got into subprime loans in early 2000, in 2008 the VA allowed these veterans to refinance their subprime adjustable rate mortgages into a more secure VA fixed rate loan. And to further facilitate refinancing under the VA IRRRL program, the VA allows the new loan amount to be up to 100% of the property's value. Previously this threshold had been set at 90%.
Additionally, in certain geographic areas, Congress raised the maximum loan amount for a VA refinance loan. The maximum amount was previously set at $417,000 but with the new changes signed into law in 2008, such loans can be made up to $625,500 for a single-unit property, and up to $1,202,925 for a 4-unit property, depending on the geographical location of the property. With an improved loan to value ratio (from 90% to 100%), and an increased maximum loan amount, the VA home loan program can help more veterans qualify for a VA loan.
If your interest rate is higher than the market average, you should ask a VA-approved lending specialist about how much a Kansas VA IRRRL Refinance could reduce your mortgage payment.