Updated VA Streamline Refinance : About The VA IRRRL Mortgage Program (Plus Mortgage Rates)
Update (April 20, 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.
What is a VA Streamline Refinance/VA Loan?
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 very competitive interest 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 (IRRRL) 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:
- Be current on your mortgage with no more than one 30-day late payment within the past year.
- Your new monthly payment for the IRRRL must also be lower than the previous loan’s monthly payment. (The only time this condition does not apply is if you refinance an ARM to a fixed rate mortgage.)
- You must not receive any cash from the IRRRL.
- You must certify that you previously occupied the property.
- You must have previously used your VA Loan eligibility on the property you intend to refinance. (You may see this referred to as a VA to VA refinance.)
The VA Cash-Out Refinance Loan
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.
VA Streamline Refinance Frequently Asked Questions
Do I need my Certificate of Eligibility (COE) for a Streamline Refinance?
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.
Does the VA control national interest rates for VA loan types?
Do I have to use my current lender to refinance my VA loan?
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.
Do I have to go through the credit check and appraisal process again when refinancing?
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.
Do I have to be eligible for a better interest rate to qualify for a Streamline Refinance?
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.
Can I receive cash-in-hand at my VA Streamline Refinance closing?
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.
What is the maximum allowable VA IRRRL loan size?
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.
Can I change the borrower-of-record with a VA Streamline Refinance?
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.
Can I use the VA Streamline Refinance for an investment property?
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.
Can I use the VA IRRRL if my loan is behind or delinquent?
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.
Do VA loans qualify for the HARP 2.0 program?
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.
Do VA loans qualify for the HARP 3 program?
Maybe. The HARP 3 mortgage may allow non-Fannie Mae and non-Freddie Mac loans to be refinanced. However, in many cases, the VA Streamline Refinance is a better fit. There are fewer verifications required with the VA Streamline Refinance, and mortgage rates may be lower.
Can I use VA loans for a no money down mortgage?
Yes. The VA loan allows for 100% financing with no downpayment.
Review Today's Live VA Loan Mortgage Rates
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.