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One of the most popular types of VA loans is called the “VA to VA refinance” or “VA streamline refinance.” For many current homeowners, this type of refinance solution offers tremendous benefits over other options.
Listed below are seven quick things that every informed consumer should know when refinancing their home. So, keep reading if you want to learn more about making the most of your mortgage.
Want to get started with the IRRRL process right now? Call us at 800-211-4940 to speak personally with a VAMortgage lenders, or click here to contact us online! We’re happy to answer any questions you may have.
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7 VA to VA Refinance Tips
Here are 7 tips designed to guide you through the VA to VA Refinance process:
What do they call it?
VA to VA refinance goes by a lot of names. Some of the most common alternatives are “VA Streamline Refinance” and “VA IRRRL”, which stands for “U.S. Department of Veterans Affairs Interest Rate Reduction Refinance Loan”. Don’t let the terminology confuse you.
What is VA to VA Refinance?
It is a VA-guaranteed loan made to refinance an existing VA home loan. You need to already have a VA home loan to qualify for this type loan. You can’t use a VA to VA refinance to purchase a new home. These loans come generally at a lower interest rate than the existing VA loan, and with lower principal and interest payments than the existing VA loan.
Does it require a credit check?
Generally, no appraisal, credit information or underwriting is required. Full-document underwriting is not required. We do not require pay-stubs, W-2 forms, or any other proof of income.
The only requirements for a VA Streamline Refinance are a clean mortgage payment history for the last 12 months, a credit-score above 600, no outstanding collections accounts, and no bankruptcy filings in the last two years.
The new loan will re-use the entitlement you originally used. A Certificate of Eligibility is not required. VAMortgage.com can verify your previous loan information by using the VA’s automated system.
Do I have to pay any costs or fees up front?
A Streamline Refinance may be done with “no money out of pocket”. Instead, all costs may be included in the new loan. The only cost required by VA is a funding fee of 1/2 percent of the new loan amount, which may be paid at closing or added to the new loan.
Veterans entitled to VA disability compensation may be exempt from the funding fee. In addition, the only other expenses are title work which is required by all states and the establishment of an escrow account to pay your homeowner’s insurance and taxes.
How can rates be structured?
They can be a fixed rate or a hybrid Adjustable Rate Mortgage (ARM). There is a good amount of flexibility in the structure of a VA Streamline Refinance loan.
What are the loan refinancing requirements?
A VA to VA Refinance must bear a lower interest rate than the loan it is refinancing. An exception to this would be if the loan it is refinancing is an ARM.
Are there things it cannot be used for?
A VA IRRRL cannot be used to take equity out of the property or pay off debts. The only debt that can be paid with an IRRRL is that associated with the VA loan being refinanced. Loan proceeds may only be applied to paying off the existing VA loan and to the costs of obtaining or closing the IRRRL.
Therefore, the general rule is that a borrower cannot receive cash proceeds from the loan. If necessary, the refinancing loan amount must be rounded down to avoid payments of cash to the veteran.
Bonus: Are there any exceptions to #7?
There is one exception to #7. The one instance where you may be able to use a Streamline Refinance to get cash out is in the event that the cash is used for the cost of energy efficiency improvements up to $6,000.
How Can I Get Started?
Getting started with your VA to VA refinance is easy! Just follow these three simple steps:
- Contact Us – Pick up the phone and call us at 800-211-4940 or click here to fill out our online contact form.
- Speak With A Representative – One of our friendly VA mortgage experts will work with you to learn about your specific situation and needs.
- Apply for a Loan– After determining the best refinancing option for you, we can walk you through the process of completing your loan application.
If you still have questions, we have the answers you seek! Whether you have questions about closing costs, limits, appraisals or refinancing a jumbo VA loan, our representatives are standing by to help.
You can also use our free refinance calculator to find out what home refinancing would mean for you!