Qualified VA borrowers have access to one of the most straightforward and powerful refinance options around: the VA IRRRL, also known as a VA streamline refinance.
VA Streamline refinance loans are relatively easy and can be completed quickly, due to the fact that homeowners are refinancing from one VA Loan product to another.
A VA IRRRL is a mortgage refinance option for Veterans with an existing VA loan. The IRRRL allows homeowners to refinance an existing VA loan to a new VA loan with a lower interest rate or convert a VA loan from an adjustable to fixed-rate.
It's often called a VA streamline because it generally requires less paperwork and is faster than a typical refinance.
The typical reason many Veterans refinance is to lower their current mortgage's interest rate. IRRRL rates may vary from home purchase rates. Below are today's VA IRRRL rates.
VA IRRRL rates change daily based on market conditions. The following IRRRL rates are current as of Jan 29th, 06:07 PM CST
|VA Loan Type||Interest Rate||APR|
|30-Year VA IRRRL Streamline||6.625%||6.794%|
|30-Year VA IRRRL Streamline Jumbo||6.625%||6.830%|
When refinancing, the difference in rate or terms must be enough to give you a real benefit, such as monthly payment savings or a fixed rate rather than an interest level that adjusts.
Every VA refinance situation is different. Talk through your specific situation with a loan officer who can run the numbers and help you gauge what makes the best financial sense.
With an IRRRL, there are several prominent advantages, including little to no out-of-pocket costs and no VA appraisal in most instances.
To avoid out-of-pocket costs, homeowners can choose to roll the closing costs and fees into the loan balance.
With a reduction of just half of a percent, a borrower could potentially generate tens of thousands in savings over the life of a loan.
Let's look at a quick example using the same loan terms (30-years, fixed rate) with three different interest rates.
|Example||Monthly Estimated Principle & Interest Payment||Total Estimated Interest Paid Over 30 Years|
|$250,000 loan at 7.5 percent interest rate||$1,748||$379,293|
|$250,000 loan at 7 percent interest rate||$1,663||$348,772|
|$250,000 loan at 6.5 percent interest rate||$1,580||$318,861|
Savings and interest rates shown here are for illustrative purposes only and may change based on a variety of factors. All loans require approval and proof of eligibility and are subject to the complete terms and conditions outlined in the loan agreement documents.
Want to see what you could save with a VA refinance? Estimate your savings and monthly payments with our VA loan refinance calculator.
You may be eligible for a VA IRRRL if you financed the property with a VA loan and can certify you live or previously lived in the home.
The IRRRL is not available to Veterans with non-VA loans. Veterans with non-VA loans wishing to refinance to a VA loan can look to the VA cash-out refinance option.
Lenders may also have guidelines and requirements regarding how long you've had your current mortgage, how many payments you've made and how long it will take to recoup the costs and fees associated with the new loan.
Specific guidelines and policies on credit scores, appraisals, loan-to-value ratio and more can vary by lender.
Veterans United currently requires homeowners to have no 30-day late payments in the past 12 months on the loan being refinanced.
Another important IRRRL note is that the VA streamline refinance only requires previous occupancy of the home. Unlike VA home purchase loans, you do not need to intend to occupy the property as your primary residence.
|Pros of VA Streamline Refinance||Cons of VA Streamline Refinance|
|Potential for lower mortgage payment||Will need to wait for rates to drop below your current rate|
|No appraisal||No cash-out at closing|
|Doesn’t require credit check||Will still need to pay closing costs|
|Fast closing time|
|Option to change loan terms|
|Lower VA funding fee than purchase loans|
The VA funding fee is an upfront fee applied to every purchase and refinance loan. Proceeds from this fee are paid directly to the Department of Veterans Affairs and are used to cover losses on any loans that may go into default.
The good news is the VA funding fee is lower on IRRRLs than for typical VA purchase and cash-out loans. Borrowers who are not exempt pay a 0.5 percent funding fee on their IRRRL. Borrowers can roll the VA funding fee into the loan balance. Estimate the cost of the VA funding fee with this calculator here.
Homeowners who receive compensation for a service-connected disability and qualified surviving spouses are exempt from the funding fee.
Keep in mind, refinancing may result in higher finance charges over the life of the loan.
IRRRL stands for Interest Rate Reduction Refinance Loan. It's also referred to as the VA streamline.
An IRRRL is generally a form of refinancing where no cash-out is allowed. However, as much as $6,000 in additional money may be borrowed to cover the cost of energy improvements completed within 90 days before closing. Ask your lender for details.
Closing costs and fees can vary by lender. However, borrowers can typically roll these into the final loan amount. Ask your lender for details or talk with a Veterans United loan specialist at (618) 746-4699.
Again, keep in mind that refinancing may result in higher finance charges over the life of the loan.
Refinancing to a 15-year mortgage is entirely possible and very common. The lifetime interest cost of a shorter loan will be less than a 30-year mortgage. However, the monthly payments on a 15-year mortgage can be significantly higher.
Look at both the monthly payments and lifetime interest costs to see if a mortgage with a shorter term makes sense.
Refinancing may result in higher finance charges over the life of the loan.