A VA Streamline Refinance, officially known as the Interest Rate Reduction Refinance Loan (IRRRL), is a mortgage refinancing option for eligible veterans and active-duty military personnel with existing VA home loans. The primary purpose of the VA IRRRL is to help borrowers reduce their monthly mortgage payments by refinancing at a lower interest rate.
Here’s how the VA Streamline Refinance works:
Eligibility: To qualify for a VA IRRRL, you must already have a VA home loan. Additionally, you need to meet certain eligibility criteria set by the Department of Veterans Affairs (VA).
No Appraisal or Credit Underwriting Package: One of the significant advantages of the VA IRRRL is that, in many cases, an appraisal or credit underwriting package is not required. This simplifies and expedites the refinancing process, making it more streamlined compared to a traditional refinance.
Interest Rate Reduction: The primary goal of the VA Streamline Refinance is to secure a lower interest rate than what you currently have on your existing VA loan. This reduction in interest rate helps to lower your monthly mortgage payments.
Closing Costs: The VA IRRRL allows for the inclusion of closing costs in the new loan amount. However, some lenders may offer “no-closing-cost” or “low-closing-cost” options, where the closing costs are either minimized or rolled into the loan without requiring an upfront payment.
No Cash Out: Unlike some other types of refinancing, the VA Streamline Refinance does not allow borrowers to take cash out of their home equity. It is focused solely on reducing the interest rate and monthly payments.
Simplified Documentation: The documentation requirements for a VA IRRRL are generally less stringent than those for a traditional refinance. This is part of what makes the process streamlined.
Automatic Authority: Lenders often have automatic authority from the VA to approve IRRRLs, which further accelerates the approval process.
It’s important to note that while the VA IRRRL offers various benefits, borrowers should carefully consider their individual financial situations and compare the costs and benefits of refinancing. It’s advisable to work with a knowledgeable lender who can guide you through the process and help you make an informed decision based on your specific circumstances.
For more information about this VA program call Kevin Tinsley 253-472-1500 (evenings & weekends OK) for a more detailed description of the program and how it can help lower your monthly VA mortgage payments.