In exchange for their tremendous service, US veterans are eligible for an array of great programs administered by the Veteran’s Administration. One of the things the VA handles is home loans. If you’re a veteran and you’ve already taken advantage of this opportunity, be aware that it’s also possible to refinance your loan through the VA IRRRL program.
Although it’s unpronounceable, IRRRL is a clear enough term: It stands for Interest Rate Reducation Refinance Loan. Basically, the VA IRRRL program works similar to ordinary mortgage refinancing, with a few added benefits for veterans. Do note that the an IRRRL is only available if you already have a VA loan. While it’s possible to move from a non-VA mortgage to a veteran’s mortgage, it falls under a separate program (VA Streamline) rather than the IRRRL system.
Here are the principle advantages to sticking with the VA when you want to refinance your mortgage. First, you can use your original entitlement over again to avoid the need to make a full down payment. Second, you can get your refinancing done without paying closing costs. You have the option of folding your closing costs into the principal you’re borrowing with a VA IRRRL. Third, you can take advantage of this opportunity even if you’re not currently living in the house you’re refinancing. All you have to do is establish that you did reside there at some point after you took out your initial mortgage.
Of course, the IRRRL system wouldn’t be a proper VA program if it didn’t have a few limitations holding it back. For one thing, you can’t take any cash out of your new loan when you refinance with an IRRRL. (There’s a solitary exception for home improvements that make your house more energy efficient. You can take up to six thousand dollars in cash for this purpose.) A VA IRRRL is strictly limited to moving your debt from one VA loan to another. Your initial loan must have been arranged through the VA, and the new IRRRL can’t be used to pay off any other debts (e.g. a second mortgage) you may be worrying about. Although you’re free to use the lender of your choice for an IRRRL, VA lenders aren’t obligated to offer this service. This is just as well, though; you’ll want to compare several different lenders before you decide who you want to use for your refinancing. The available interest rates vary significantly from lender to lender.
An IRRRL can be used (and often is) to shift between fixed-rate and adjustable-rate mortgages. Just keep the usual cautions in mind with this situation. Going into a fixed-rate mortgage will likely call for a higher interest rate, while shifting to an ARM may expose you to rate changes in the future.
Refinancing your mortgage is a great idea whenever you have the opportunity to secure a more favorable interest rate. As a veteran, you can get very advantageous terms by sticking with the VA when you refinance. Explore your options carefully and give an IRRRL careful thought when you’re planning a mortgage change. Shop around for multiple written mortgage quotes and get a free VA IRRRL refinance quote right here!