Updated January 2018
IRRRL Lenders: What You Want To Know
The VA Streamline Refinance Program or Interest Rate Reduction Refinance Loan is an outstanding way for VA-carrying homeowners to refresh the terms of their loans and take advantage of today’s historically low interest rates. But before you sign a deal with any lender, there are things that you need to know beforehand to avoid any costly mistakes in the future.
First and most importantly, you need to remember that the Veterans Affairs does not originate the loans per se. They only insure the loans, meaning they will pay a portion of the loan if you fail to pay back the money you owe. Home purchases via the VA mortgage program as well as its refinance programs can only be transacted via VA-approved lenders.
Here’s what you need to know about VA lenders.
1. You are not restricted to do a refinance with the same lender who originated your original mortgage. Feel free to shop around for lenders who can give you better terms according to your current financial situation. Also take into account the lender charges, penalties, and other fees.
2. Not all VA loan rates are equal. Each lender may give you a different quote depending on standards that are guided by the department but set by the lenders themselves.
3. Interest rates fluctuate so the rate that you may get from a lender last week can differ from the rate now, even at a day’s interval. So if you’re doing a lender comparison, be sure to ask them within short intervals or you will not have a true comparison.
Be Mindful: Closing Costs, “No Cost”, and Your Interest Rate Reduction Loan
Be wary of lenders advertising a zero-cost closing. There’s no such thing as free lunch although with the IRRRL program, closing costs will be comparably lesser than conventional refinancing cost.
The only fee the VA usually requires is a funding fee at the rate of 0.50% of the loan amount. The funding fee can be paid in cash, or it can be rolled into the Interest Rate Reduction Refinance Loan.
Some lenders may not tell you this but you can opt to pay these costs upfront so you can avoid paying extra interest within the stretch of 15 to 30 years that you’re making your mortgage payments.
How to Find a VA Approved IRRRL Lender
Make sure you shop around and talk to different mortgage lenders. This is essential to finding the best lender for you. They may vary widely in the terms that they offer. They may also vary in lending requirements. Lenders are not required to check your credit score or get an appraisal of the home, but many of them choose to do so during underwriting and before signing. You can easily check out lenders online and compare them.
Taking advantage of the VA streamline loan or IRRRL to lower your interest rates and monthly payments is a smart move, especially in today’s economy. If you are entitled to these benefits, why not go ahead and get started on an IRRRL.Click to See the Latest Mortgage Rates»