A Guide to VA Streamline Refinance (IRRRL)
Eligibility For VA IRRRLs
If your clients have a VA loan and are interested in lowering their interest rate, you should consider offering them the option of applying for the Interest Rate Reduction Refinance Loan. Abbreviated as IRRRL, this refinancing option allows veterans and military families to lower their interest rate by switching from adjustable to fixed-rate financing. If your clients meet the below requirements, they may be eligible for a VA IRRRL.
- They have an existing VA loan
- They currently live or have lived in the home the loan is for
- They’re up to date with payments
The Benefits of a VA IRRRL
Aptly named streamline refinance, VA IRRRLs are touted as one of the most hassle-free loan programs. If your clients are considering applying, below are some advantages to doing so.
- Income documentation isn’t required
- No need for asset documentation
- Lower rates are guaranteed
- No request for home appraisals
To know if a VA IRRRL is right for your clients, it’s important to familiarize yourself with the rates, closing costs, and miscellaneous fees that come with a VA streamline refinance. Regarding the funding fee, it’s 0.5 percent of the loan amount. In some cases, they can be exempt from paying this. It’s also crucial to note that they need to recoup any closing costs paid during the refinance within 36 months. These include fees that the lender has provided on their behalf. Escrow, prepaid charges, and per diem interest don’t apply. Finally, cashouts aren’t permissible with VA IRRRLs.
How to Apply
To apply for a VA IRRRL, they’ll need to work with a lender. A mortgage company, private bank, or credit union will suffice. After gathering all pertinent information, the lender will close on the loan after the client has paid the closing costs.
Have questions? Speak to an expert for more information.