Update (November 19, 2014) : This VA Streamline Refinance information has been revised to include new information. Loan guidelines change constantly. If you get your VA Streamline Refinance information somewhere else on the internet, make sure it's current and accurate.
VA loans are a special loan program designed specifically for veterans, issued by approved lenders and guaranteed by the federal government.
The VA Streamline Refinance is the most common loan type within the VA loan umbrella, and is officially known as an Interest Rate Reduction Refinance Loan (IRRRL) by the government.
The program is also known as a VA-to-VA Loan.
The VA loan’s definitive characteristic is that veterans with qualifying credit and income can purchase a home with no money down, which makes buying a home extremely attractive for those who have served in the military. In addition, VA loans also offer feature flexible requirements, no private mortgage insurance (PMI), and extremely competitive mortgage rates.
In order to qualify for a VA Loan, a veteran must have served 181 days during peacetime, 90 days during war time, or 6 years in the Reserves or National Guard. You may also qualify as the spouse of a service member who was killed in the line of duty.
Generally speaking, almost all active duty and/or honorably discharged service members are eligible for a VA purchase or streamline refinance loan.
The VA Streamline Refinance is also known as the Interest Rate Reduction Refinance Loan (IRRRL). The IRRRL allows you to refinance your current mortgage interest rate to a lower rate than you are currently paying.
The Streamline loan is extremely popular because of its ease of use: once you have already been approved for your initial VA purchase loan, it is relatively simple to lower your interest rate and experience considerable savings. In most cases, a loan officer or lender with expertise in VA loans should be able to complete the loan within a month’s time in most cases.
VA loan closing costs can be rolled into the cost of the loan, allowing veterans to refinance with no out-of-pocket expenses. Sometimes it is also possible for the lender to take the brunt of the cost in exchange for a higher interest rate on your loan.
In order to qualify for a VA Streamline, you must meet the following requirements:
A secondary VA refinance loan type is the VA Cash-Out refinance loan. The Cash-Out refinance allows borrowers to refinance their conventional or VA loan into a lower rate while also taking cash from the home’s value.
Functionally, the VA Cash-Out refinance loan replaces your existing mortgage instead of functioning like a home equity loan, which it is often confused for. A qualified borrower can refinance up to 100 percent of their home’s value in some cases.
The Cash-Out refinance loan is a loan type available in any form – whether USDA, FHA, or conventional. Veterans generally choose to use the VA Cash-Out over other loan types because the period to pay off the loan is extended, and also, generally comes with a lower interest rate.
Just like the VA Streamline Refinance loan, the home must be used as a principal dwelling by the owner. There is no set period of time that you must have owned your home, however, you must have sufficient equity to qualify for the loan.
Since you used your Certificate of Eligibility to get your first VA loan, it isn’t needed to qualify for a streamline refinance of your existing VA mortgage.
No, you do not. In fact, it is encouraged that you shop around between various lenders, as each will offer various interest rates for you VA loan. All that matters is that the lender is VA-approved. Because so many lenders out there finance VA loans, it makes sense to shop around. You can use this form to compare VA mortgage rates.
There is no requirement from the VA for another credit check or appraisal process, because you have already been approved for a loan. However, many lenders require a credit check and appraisal to guarantee that you are still financially stable enough to pay for your mortgage and also, that the house’s market value is still higher than their maximum loan amount.
Not if you meet certain conditions. If you are going from a fixed mortgage to another fixed mortgage, the VA requires that your IRRRL be of a lower interest rate, but if you are moving from an adjustable rate mortgage (ARM) to a fixed rate mortgage, the VA will allow you to refinance to a higher interest rate.
Yes, you may receive up to $6,000 cash-in-hand at your IRRRL closing. The cash, however, must be used for energy-efficiency improvements, and must be a reimbursement for improvements made within 90 days prior to closing. Some VA borrowers will receive a cash disbursement of "old" escrow funds, too.
There is no maximum loan size limit for a VA loan. However, a VA Streamline Refinance will be limited to the existing loan balance plus any accrued late fees and late charges, plus typical loan costs and the cost of any energy efficiency improvements.
In general, the borrower(s) obligated on the original VA loan must be the same as borrower(s) obligated on the refinance. However, this is not always possible. As an example, assume that a veteran and spouse are obligated on an existing VA loan. An IRRRL is possible in all of the following scenarios: Divorced veteran alone; Veteran and different spouse; and, spouse alone because the veteran died. An IRRRL is not possible for a divorced spouse alone, or a different spouse alone because the veteran died.
Yes, you can use the VA Streamline Refinance for an investment property. You must only certify that you previously occupied the property as your home. The property does not have to be your primary residence.
Yes, you can VA Streamline Refinance a loan which is behind in payments or delinquent. Your lender will want to know that the cause of the delinquency has been resolved; and you must be willing and able to make the payments on the new VA loan. Lastly, you will be asked to provide a letter to explain the delinquency along with additional supporting documentation. The Department of Veterans Affairs will make a final determination whether the IRRRL should be approved.
No, the HARP 2.0 mortgage is separate from a VA loan, and HARP 2 loans must be currently backed by Fannie Mae or Freddie Mac.
Yes. The VA loan allows for 100% financing with no downpayment.
The VA Streamline Refinance is one of the simplest and fastest mortgage products available for consumers today. If you have an existing VA loan, get started immediately with a VA Streamline Refinance rate quote. Mortgage rates are low, so it’s a great time to take advantage of your veteran benefits.
Click here to get a rate quote.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
Barry L. Systems Analyst
The Mortgage Reports is an excellent resource. I depend on the Mortgage Reports for the most up-to-date information regarding shifts in government policy and mortgage rate information in general.
The Mortgage Reports is invaluable. It's our primary source for information on housing finance.
Mohammed Y. Retired
The Mortgage Reports is informative and I read it daily. I am grateful for the knowledge I have gained.
2014 Conforming & FHA Loan Limits
Mortgage loan limits for every U.S. county,
as published by Fannie Mae & Freddie Mac, and the FHA.