VA Interest Rate Reduction Refinancing Loan
The VA Interest Rate Reduction Refinancing Loan, or the IRRRL, is a special loan program offered by VA lenders that allow for a homeowner to refinance into a VA loan with a lower rate or to refinance from an adjustable rate mortgage into a fixed rate loan.
The IRRRL is also called a “streamline” mortgage, meaning the approval process is streamlined with fewer closing costs and underwriting requirements. The advantage of the IRRRL means no appraisal nor credit report is required. There is one caveat here however, just because the VA does not require an appraisal or a credit report does not mean a VA lender does not. In fact, most lenders will require an appraisal to meet their investor overlays. An investor overlay is what the investors give to mortgage banks to meet prior to funding your loan. Because each mortgage bank has different investors sometimes these requirements vary. You’ll want to check with your lender on what their specific requirements are with IRRRL’s.
A VA streamline mortgage means your lender does not require an appraisal, a minimum credit score or even verification of employment. Yet there are special guidelines that the IRRRL loan must follow. One, your new rate must be lower than your current rate and you must refinance from your current VA loan into the new IRRRL loan. It must be purely a VA to VA transaction. Second, taking out equity in the form of cash is not allowed, you may only borrow the amount needed to pay off the mortgage and add associated closing costs. For those that are looking to take cash out when they refinance the VA Cash out Refinance will be an option. Properly structured, there should be no out of pocket expenses with the IRRRL loan.
Every VA approved mortgage lender has the ability to approve an IRRRL loan for you and it is not necessary to use your old VA lender. Neither will you need to provide a new copy of your Certificate of Eligibility; instead, your lender will complete the necessary paperwork on their end. Finally, while it is not necessary to occupy the property that holds the original VA loan you must certify that you did occupy the property when obtaining the new VA IRRRL.
If you have a VA loan now and rates are lower than your original note or you have an adjustable rate mortgage and want to refinance into a fixed rate, contact a VA lender today and let them know you’re interested in the IRRRL loan. Or better yet, let them know you want a VA streamline refinance…they’ll know what you mean!
VA Loan Captain Lenders are VA approved lenders that can assist you with completing an IRRRL. If you are unsure about your savings then you can easily receive a no cost or obligation consultation.