Updated January 2017
If you’re in the market for a VA loan refinance, you may have heard the term IRRRL kicked around. IRRRL is the VA’s acronym for Interest Rate Reduction Refinance Loan. It is also known as a VA streamline refinance loan. Let’s talk about this great benefit to our veterans.
VA streamline refinance loans are a “VA to VA” loan. In other words, your original loan must be a VA loan in order to refinance it to an IRRRL.
The good news about an IRRRL is that it normally results in a lower interest rate. The exception to this is when the original loan is a VA adjustable rate mortgage loan that is being refinanced to a fixed rate loan. In that case, it is possible that the new fixed rate might be higher.
Another fact about VA streamline loans is that, although new appraisals and credit reports are not required by the VA, most lenders do require this information in order to refinance your loan.
A certificate of eligibility is not required for the IRRRL loan, since the lender can use the VA’s e-mail confirmation procedure. In addition, an IRRRL loan will not cost the borrower any additional money, as the costs can be included in the new loan. The only cost the VA asks as part of the cost of your IRRRL is a funding fee of one half percent.
Any lender can handle a VA streamline refinance. You do not have to use your original VA lender. Shopping around for a lender could save you money by getting the best possible rate.
No cash out clause in allowed an a IRRRL refinance. However, allowable fees such as the funding fee and closing costs can be included in the new loan balance as long as the new loan does not exceed the old mortgage balance. In addition, there is an allowance of up to $6,000 for energy efficiency improvements.
The VA IRRRL program is a fantastic loan benefit veterans who have served and are currently serving our country. If you think you qualify, look into a VA streamline refinance loan today. To get started, just take a minute to fill out the form below to get matched with a VA-approved lender.