If you are looking for a way to save money every month on your mortgage, one way to do that is to refinance. Depending on the type of mortgage you currently have, you may even have options to streamline the process as is the case with the VA IRRRL program. This program is limited to veterans as it is a VA loan, but there are other stipulations you must follow as well.
Your Current Mortgage
Your current mortgage must be a VA loan if you want to use the VA IRRRL program. This means that even if you are a veteran, yet you took on some other type of financing, such as FHA or conventional financing, you cannot use the VA streamline program to get a lower rate. The program is intended strictly for refinancing from one VA loan to another. If you can prove that you have a VA loan now and used your entitlement to obtain it, then you can apply for the VA streamline refinance. If you have other types of financing, you can refinance into a standard VA loan if you are a veteran with entitlement, but you will have to follow the regulations of the standard VA program, which differ from the streamline program.
Your Qualifying Factors
Once you know that you are eligible to apply for the VA IRRRL program, you have to know what qualifying factors are necessary to help you get the loan. The good news is that because it is a streamlined process, there are not a lot of requirements. The largest requirement is that you have your VA loan and your entitlement is still good. The other requirements are taken directly from your original loan application including your employment, income, and the appraised value of the home. The only new piece of information the VA requires is proof that you made your last 12 housing payments on time. This can be proven with your credit report or a simple 12-month mortgage history from the lender.
Some lenders, however, put in their own requirements since they are the entity giving out the funds. The VA does not fund the loans – they simply guarantee them for the lender should you default on it in the future. This means the lender can impart their own overlays on top of what the VA requires just to ensure that your loan is secure. Every lender will differ, but some of the things they might look for include:
- Updated employment information to ensure that you are still employed at the same company
- Updated income information to verify that you make as much or more than you made when you applied for the first loan
- Updated appraisal if the lender is worried about the values in your area as sometimes certain areas have seen drastic drops in value
Your Credit Score
The best news is that your credit score should not matter when it comes to being eligible for the VA IRRRL program. Most lenders will look at your credit to make sure there is not a multitude of late payments or collections, but in the end, your credit score does not matter. Some lenders might impart a minimum credit score that they allow for the VA loans. If your score is below the score allowed by one lender, you can shop around with others. As long as the lender is VA approved, you can get your streamline refinance with any lender.
The VA IRRRL program is a great way to save money every month if interest rates have gone down since you received your first mortgage. The key is to make sure that your housing payments have been made on time for the last 12 months and that your other credit is in satisfactory order. The VA does not require your credit to be pulled or any other information to be re-verified, but certain lenders might, so before you apply for the program, make sure all of your information is verifiable and acceptable to make the process go as smoothly as possible. It is always a good idea to shop around with several lenders as well to ensure that you are getting the best deal possible on your new refinance.