Do you already have a VA loan? If you do, then you know what a great benefit you get with a VA refinance loan. But are you aware that now may be the perfect time for you to refinance your VA loan? One of the most popular refinance programs in the country is the VA streamline refinance. Below is more information so that you can determine if this is the right financial move for you.
About the Interest Rate Reduction Refinance Loan
The VA Interest Rate Reduction Refinance Loan or IRRRL is a refinance program that is for home owners who have a current lien guaranteed by the VA. It is more commonly known as a VA streamline refinance. This program makes the home refinance process simpler by waiving the customary documentation requirements such as employment check, bank account and credit score information, and a new appraisal of the home. Over the years, the VA streamline rates have earned a reputation for having very competitive interest rates with low lending fees.
More About the VA Streamline Refinance Mortgage
VA mortgages are designed specifically for active military and veterans. VA refinance loans may be issued by any lender that is approved by the VA. They are backed against default by the federal government. The major benefit of the VA loan is that if you have sufficient documented income and credit, you can get a home loan with no down payment required. This makes buying a home with a VA loan much easier for many who have served in the military.
Also, VA loans offer very flexible qualification standards, no mortgage insurance and rates that are even lower than what the FHA loan offers. (learn more about the FHA-streamline option)
To qualify for the VA mortgage, you need to have served in the military at least 181 days during a time of peace, 90 days during a war period, or six years in the National Guard or Reserves. You also can get an VA loan if you are the spouse of a former member of the service who died in the line of duty.
The VA streamline refinance program is a special program that is available for people who have current VA loans. This loan allows you to easily refinance your mortgage to a lower interest rate than what you have now. Many people who have had VA loans for several years are choosing to refinance their loans now in 2017 because interest rates have fallen in the second half of the year. Many people with VA loans are able to refinance at a rate well under 4%. This can give many the opportunity to save hundreds of dollars each month in payments. The streamline refinance loan by VA is very popular because it is so easy to get the paperwork done. You already have been approved by the VA for your loan, so it is very easy to get the refinance done.
Another benefit – your closing costs can be just rolled into the loan itself. So, you may be able to do a VA mortgage refinance without paying anything out of pocket. It also may be possible to have the lender take most of the cost of the loan if you agree to a slightly higher interest rate.
Qualifications for a VA Streamline Refinance Mortgage
To qualify for this excellent program, you need to meet the following standards:
- Be current on your VA loan; you cannot have more than a single 30-day late payment in the last 12 months.
- The new payment on the refinanced loan has to be lower than the previous mortgage payment. However, there is an exception: If you refinance an ARM into a fixed rate loan, the payment does not need to be lower on the new loan.
- You cannot get any cash back from the refinance; if you want to get cash out, you have to do a traditional refinance with full loan documentation.
- You have to certify that you have been living in the property.
- You have to have previously used your VA loan eligibility on the home you want to refinance.
Below are some common questions and answers about this program:
Do you need your certificate of eligibility to get a VA streamline refinance? No. As you used it when you got your original loan, you do not need it again for the refinance.
Does the VA have control over the rate you get? No. The VA does offer a simple, straight forward process for getting a refinance, but VA mortgage rates are set by banks.
Do you need to use your current lender for the refi? No. It is better actually if you look around at other lenders. You may be able to find a lower rate if you do so.
Do you need to have another credit check? There is not any VA requirement for your credit to be checked again. But your individual lender may opt to check your credit again. They also may want to check your income to ensure that you have the income to make your payments. In most instances, credit requirements on VA loans are very reasonable.
Can you do a VA streamline refinance if you are behind on your current loan? Yes, you can in some cases. The lender will want to understand why you are behind and that the problem has been resolved. You will need to provide a letter that explains the reason for you being behind on your current loan. It is up to the VA to decide if they will allow you to continue with your refinance.
The VA streamline refinance is a fantastic program that is easy to get done and to qualify for. You should definitely refinance if you have a VA mortgage with a rate of 5% or higher.