Military veterans and servicemembers have plenty of great benefits. From healthcare to education, from housing to memorial assistance, qualified veterans and active duty military can take advantage of different programs.
The United States Department of Veterans Affairs has conceived numerous housing programs to cater to and aid many veterans. One of which is the IRRRL. This is the Veterans Affairs streamline refinance program.
IRRRL stands for ‘Interest Rate Reduction Refinance Loan’. As the name suggests, veteran homeowners may refinance their existing VA home loans to a new one with a much lower interest rate. A reduced rate must result in a smaller monthly mortgage payment.
What is good about the IRRRL is it is a streamlined program. What this means is that compared to the other VA home loans, the IRRRL process is much shorter and is faster.
What also sets this program apart from other refinance product in the market is the possibility of not having any out-of-pocket costs. This can be done by rolling all the costs into the new mortgage loan. Another way is to set the interest rate high enough to enable the lender to pay for these costs. However, the rate must not be too high that it will make the new loan more expensive than the current one.
How Do You Look for Credible IRRRL Lenders?
First, you need to understand how a VA loan works.
The IRRRL is a VA home loan is government-guaranteed refinance program. Division of the federal government which ensures these loans is the Veterans Affairs. The VA does not originate the loan. The money which is being used to finance the loan is from a private lender.
With that in mind, you already know that the VA is not your lender. But it is the VA who will cushion the lender in case a borrower defaults on a loan. No lender is required to offer you an IRRRL. Moreover, any lender may make you an IRRRL if they so choose.
To help you with your quest, you may ask from the Veterans Affairs a list of lenders who can administer an IRRRL. You can start filtering through this list by sorting out which lenders are near you.
If you opt to stay with your lender, you may do so as long as they wish to process your refinance as an IRRRL. But the VA urges veterans to always shop for lenders as there can be huge differences in the terms offered by varying lenders.
Another way of doing a quick search is doing it online. You can get matched with a VA IRRRL lender by completing an online form below. A credible VA-approved lender will then contact you and help you assess if an IRRRL is the perfect refinancing option in your case. In just a few simple clicks, this is all possible.
What Do IRRRL Lenders Look for?
Not that you know how to find reputable VA IRRRL lenders, you should also learn about what lenders look for in a borrower.
You must know that the VA has a set of requirements that a VA borrower needs to meet in order to be approved for a VA Streamline Refinance Loan. However, since it is the lender who provides the funds, they may have overlays. The VA does not prohibit this, but not all lenders have it. It is best that you contact different lenders because their terms can vary widely.
Here are the IRRRL eligibility requirements set by the Veteran Affairs. It is pretty basic, so it should not be difficult to understand:
- Your home must be funded through a VA Loan if you want to refinance through the IRRRL.
- While other VA loans require you to have the property as your primary residence, In an IRRRL you only to certify or prove that you once occupied the home.
- There also must be current with your mortgage payment and there should be no more than 1 late payments within the last 12 months. Additionally, the late payment cannot be more than 30 days late. Reviewing your mortgage payment history is important to the VA. They believe that if you are able to keep up and afford the current payments, you won’t have problems paying towards a smaller one.
- Lastly, refinancing with an IRRRL should bring about a significant difference. It should be beneficial in such a that it lowers your interest rate saving you money, making your monthly payments smaller for you to afford it better or switching from an ARM to a fixed-rate loan.
Remember that the lender can overlay. While the VA does not require a credit review, lenders may choose to do so. Some of them pull your credit to evaluate if you truly have been a responsible borrower. If one lender declines your application because you do not meet their credit requirement, do not lose hope. Not every lender has overlays.
Begin your search today! Start to look for IRRRL lenders. An IRRRL can be an opportunity to save more money. Learn more about it today.