VA Streamline (IRRRL) Rules Revisited
When VA borrowers consider a refinance, most often the loan program chosen is the VA’s Interest Rate Reduction Refinance Loan, appropriately named the IRRRL refinance loan. The IRRRL allows VA borrowers to adjust their loan with less documentation required. But specifically, what are the special features of the IRRRL program?
IRRRL loans are the popular choice because they’re so easy to qualify for because there’s much less documentation required. Standard documentation such as paycheck stubs or tax returns or bank statements aren’t required for the IRRRL refinance program. There’s no credit check for the VA IRRRL, only the determination that there are no payments more than 30 days past the due date during the previous 12 months.
The first requirement is the refinance transaction must be a VA to VA refinance. While it’s possible to refinance an FHA loan into a VA loan, the IRRRL program requires that only a VA loan be refinanced. Borrowers who refinance into an IRRRL can’t take out any additional cash during the transaction and are only allowed to roll in closing costs into the loan.
This VA streamline loan program doesn’t require current occupancy in order to qualify. This means that if you used your VA benefit to buy the property then later moved out yet kept the original property, you can still qualify for the VA streamline program.
Your VA loan officer will also certify that your new monthly payment is lower than your current one, which is easy to accomplish with a lower rate. The exception to this rule is when a borrower refinances from an adjustable rate mortgage into an ARM.
Sometimes the federal government’s red tape gets in the way of certain agency programs but in the instance of the VA streamline refinance program, they definitely got it right. This feature of the VA loan is one of the highlights of the program.