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A VA IRRRL lender will help you secure a lower interest rate VA loan by refinancing your current VA loan into a new VA loan. If that sounds a bit confusing, consider that current VA loan programs offer veterans some of the best interest rate and home loan options – a VA IRRRL lender will streamline your VA loan options even more.
Keep reading to learn how a qualified VA IRRRL lender may be able to help you.
If you have questions and would like to speak to a representative, you can give us a call at 800-211-4940. You can also reach us online by starting a live chat or filling out our online contact form.
IRRRL stands for Interest Rate Reduction Refinance Loan and is often called a “Streamline” or even a “VA to VA”. This loan program option, [M1] open to veterans only, [M2] allows veterans to borrow up to 100.5% of the total loan amount. 100% for the amount of the loan, and .5% for the VA funding fee.
A Word About VA Funding Fees
VA funding fees are required by law and imposed on VA mortgage loans and VA refinance loans alike. VA funding fees help reduce taxpayer burden by offsetting the cost of a VA mortgage loan. When it comes to VA loan refinance, fees are generally above 2% for first-time loan purchasers and slightly above 3% for buyers borrowing an additional time.
Some buyers may be exempt from VA funding fees if they are getting disability compensation related to medical issues received in service, or if the veteran isn’t currently drawing on their retirement pay. There may be additional VA funding fee exemptions offered, especially for surviving spouses, and you should consider asking your VA IRRRL lender if you qualify. The VA makes the ultimate decision regarding VA funding fee exemption, however, so be prepared to have your exemption heard on a case-by-case basis.
When it comes to streamline loans, you’ll find that the fees and terms associated with this program will vary from lender to lender. It’s important that veterans protect themselves from predatory lenders and lending practices – especially those making vague claims surrounding costs included in the loan. A trusted, qualified VA IRRRL Lender will tell you that the VA only requires a funding fee at one half of 1% of the loan and that this cost can be paid in cash or tacked on to the loan.
Can I Streamline a VA Jumbo Loan?
Remember that a streamline loan is a VA loan refinancing to a new VA loan. If you are considering a VA jumbo loan and want the opportunity to refinance down the road, you’ll need to make sure you speak with a VA IRRRL lender who is qualified to help you understand refinance options with this type of non-traditional loan.
VA jumbo loans are considered non-traditional loans, or unconventional loans, since they are offered to allow buyers to purchase luxury homes, or property in high cost areas, where loan amounts are higher than conventional loan amounts – over $417,000 and up to $1,094,250. VA jumbo loans also allow veterans to make a purchase above their VA eligibility limit, and the VA doesn’t require down payment from veteran borrowers for the purchase.
Besides offering an opportunity to own a larger home or purchase a home in a high cost area, VA jumbo loans bring benefits like lower interest rates and less money required for a down payment. VA jumbo loans also exempt the borrower from having to pay private mortgage insurance.
Jumbo loans, and VA jumbo loans with their higher price tags, do carry significant risks for the loan lenders, however. A VA jumbo loan lender will calculate the potential for loan default, consider the amount of the loan, and weigh these factors, among others, to determine if they can support what are often heftier responsibilities for the lending organization. Consider that if you are attempting to refinance a VA jumbo loan that this may also be a lengthy process while the VA jumbo loan is being shopped to lenders who will need to evaluate their risk of taking on a high-end debt.
VA IRRRL Challenges
If you’re ready to save money on your monthly mortgage payments and secure a lower interest rate on your current VA loan, get ready to take a few notes before shopping the loan to your VA IRRRL Lender. To begin with, make sure that the new interest rate you are trying to secure will be at least one percent lower than your current rate. You won’t need to reapply for a Certificate of Eligibility, and you won’t need to pay any fees upfront. Your IRRRL program allows you to explore lenders for VA loan refinance outside of the lender holding your existing mortgage, and this will be crucial as you shop for a trusted VA IRRRL lender.
The IRRRL program holds a few caveats; most notably a borrower cannot receive cash proceeds from the streamline, or VA loan refinance. Often after interest rates are lowered through traditional refinancing, the process leaves a surplus or leftover amount which borrowers pocket for various reasons including home improvement projects. However, an additional amount for energy efficient upgrades and remodeling projects may be tacked on to the streamline loan. The VA IRRRL program also states that borrowers cannot combine existing loans – such as an existing mortgage and a second mortgage. Your VA IRRRL lender will be able to speak to specifics so be sure to ask them to explain all of the fine print surrounding the mortgage money-saving refinance options available to veterans.
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A VA IRRRL lender working on a streamline loan for you will explain all of the programs intricacies and details while helping you save money on your monthly mortgage payments and lock in a lower interest rate. Be sure to shop around your VA to VA loan and achieve a level of comfort with you lender, and ultimately select the best IRRRL lender to meet your specific needs.