Refinancing allows homeowners to lower their overall mortgage payment by reducing the interest rate resulting in thousands of dollars of interest savings over the life of the loan.
Mortgage Rates were/are at an all-time low. They are still close to 4% but they’re on the way up and if you don’t “fall in” soon you might miss out on the opportunity of a lifetime. The VA IRRRL is a great REFI option and there hasn’t been a time in 30 years when it made more sense.
As this economy gets tougher every dollar you save could be the one that saves you!
The Veterans Administration offers Interest Rate Reduction Refinancing Loans also known as VA Streamline Refinance Programs. The VA Streamline refinance allows veterans to lower the interest rate on their mortgage with no out of pocket costs so the savings begin immediately. Unlike a conventional refinance, there is no appraisal required, no income verification and no credit report required.
Interest Rate Reduction Loans (VA IRRRL) – VA Streamline
With this loan you are not able to take cash out but you can reduce your current interest rate. The costs of Streamlining your refinance are much less than when you bought your home. When you bought your home through a VA guaranty loan, the VA funding fee would have been around 2 to 3%, but when you streamline your mortgage you would only need to pay ½%. If you receive VA disability benefits the VA will waive all fees. General credit underwriting is also not used to qualify for the VA Streamline loan. If you have no more than one 30 day late mortgage payment over the past 12 months you will qualify.
For example your current rate is 6.75% on a 30 year fixed rate mortgage
Your loan amount is $130,000 Payment is $843.00
- You want to do a VA IRRL the rate you can obtain now is 6.00%.
- You can reduce your payment by $64.00 Which would save you $768 a year
- And $23,040.00 saved throughout the life of the loan.
To qualify for a VA IRRL you must meet the following guideline:
- No more than one 30-day late payment in the last 12 months on your current mortgage.
- The new interest rate and payment must be less than current rate and payment
- You must be current on your mortgage
- Your current loan must be a VA mortgage
- You can not Streamline a VA repo, you must be the eligible veteran or surviving spouse who originally qualified for the loan.
- Closing costs, interest and impounds can be financed into the new loan
- You can choose a 30 or 15 year new mortgage
- There is no minimum time requirement (seasoning) on your current VA loan
- You may not receive any cash from the loan proceeds
IRRRL Benefits
- There is no appraisal necessary
- There is no underwriting
- There is no credit check
This is a great way to save money and reduce your interest rate.
Save your home with an IRRRL Refinance
If you have a VA guaranteed mortgage and you are about to go or have gone delinquent on the payments, all may not be lost at all. You can refinance using an Interest Rate Reduction Refinancing Loan (IRRRL) and take advantage of a streamline or semi streamline system that the VA has set up. If you have not yet gone delinquent, the process is nearly instantaneous — there is no appraisal, no credit check, no real underwriting and no delays. If you are 30+ days delinquent, then the lender needs prior approval from the VA to proceed, but there is likely to be no material delay.
VA Refinancing with Cash Out
You can refinance your current mortgage with the maximum Loan to Value amount of 90%
The maximum guarantee for cash out is $36,000.
If you have an existing VA home loan on your home, and there are some debts hanging around that need to be wiped out such as credit cards, installment loans, or taxes, now is the time to refinance with a cash out refinancing. We call this “debt consolidation” and you really do need to take a close look at it. You can take out up to 90% of the appraised value of the home plus any energy efficiency improvement you would like to add (up to $6,000). The rates are nearly certain to never ever be this low again, so contact a VA approved lender and see how much cash you can pull out of the house to pay debts with a cash out refinancing.
VA Refinance FAQs
Q. What is the different between a Streamline and a Cash out Refinance?
A. With the Streamline Loan you can not consolidate debts you can only reduce your montly mortgage payment on your first loan. The VA Cash Out loan allows you to pay off a 2nd mortgage and consolidate debts.
Q. What if I have less than perfect credit?
A. On the Streamline program the lender only checks your payment history on your exisitng VA loan. You can have one (30) day late payment in the past year. With the Cash Out program you must have at least average credit, some delinquencies are o.k. it is on a case by case basis.
Q. What is the VA Funding Fee?
A. With the Streamline Program the VA Charges 1/2% of the loan amount added to your loan (example $200,00 loan = $1,000 funding fee). On a Cash Out loan the VA charges a 2.8% funding fee (example $200,000 loan = $6,000 funding fee). The VA will waive this fee completely if you are receiving VA disability benefits. The exact amount of funding fee required by VA changes, so consult the department’s website or speak to your VA lender for the latest amounts.
Q. What if I have refinanced once before?
A. You can refinance as many times as you like. For streamline, You can refinance as many times as you wish as long as you lower your payment and interest rate.
Q. How long does the process take?
A. The entire process for a VA cash-out refinance generally takes 30 days. The streamline closes much faster.
Q. Is an appraisal required for VA refinance transactions?
A. On the Streamline loan NO. On the Cash Out loan YES- you can borrow up to 90% of the appraised value as determined by the VA assigned appraiser.
Q. Can I pay off credit cards with a streamline refinance?
A. The VA Streamline refinance does not allow you to add second mortgages or other debts to you new loan. What can be added to the new loan is closing costs, interest, and tax and insurance impounds.
Q. Can I get any cash out through a streamline mortgage loan?
A. No. However you will receive a refund from your current lender for your tax and insurance impound account usually $750 – $2500, and you can skip your next two mortgage payments, so effectively you will free up $3000 – $5000.