If you’re a veteran, I’d first like to take this opportunity to thank you for your service to our country. There are loan options available to you, and one of those is an IRRRL. You must be a Veteran with a current VA-backed home loan to qualify. IRRRL is an acronym for Interest Rate Reduction Refinance Loan. It’s also known as the VA Streamline, and to refinance, the loan must provide a net tangible benefit (NTB) which would be in the financial interest of the Veteran.
Normally, obtaining a lower interest rate is the reason behind refinancing – however there must be enough of a different in the current and new mortgage to justify the expenses incurred. Some examples of acceptable benefit can include shorter term or significantly lower payments.
As mentioned before, the Veteran must have a current VA-backed home loan in order to refinance using this program. The Veteran does not need to currently live at the home, as long as it can be confirmed that he/she did at one time.
Normally, an appraisal is not necessary, plus less verifications are required. You do need a minimum credit score of 640, and the borrower must be current on their payments with no 30-day late payments within the last 12 months. A two-year employment history is required.
Like some other loans, there are expenses associated with the IRRRL, but they can be rolled into the loan balance. The VA funding fee, required on new VA loans for purchases or refinances is lower on the IRRRL at 0.5%. Disabled Veterans and qualifying surviving spouses refinancing under this program are exempt from the VA funding fee.
As a side note, this program is not available as a cash-out refinance. You can however take advantage of a $6,000 exception for additional funds to pay for energy improvements which would be completed 90-days prior to closing. Your lender can disclose more information on that to you.
If you are a Veteran and considering a refinance, ask your mortgage professional about this program. If you need a recommendation of a trusted mortgage professional who is experienced in VA loans, give me a call at 703-303-4010.
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