The VA Streamline Refinance (also known as the Interest Rate Reduction Refinance Loan, or IRRRL) is a legitimate refinance program backed by the U.S. Department of Veterans Affairs. The IRRRL program is meant to make refinancing simpler and more affordable for veterans and service members.
Just so, are VA interest rates lower than conventional?
The VA loans typically have lower interest rates than conventional mortgages, allow for higher debt-to-income ratios and lower credit scores, and they don’t require private mortgage insurance. … “It takes lenders more work and time to process VA loans than conventional loans, which cuts into profits,” Wynant said.
Correspondingly, can you reduce the term on a VA Irrrl?
The VA allows you to play around with your loan term on the VA IRRRL. You can either increase it or decrease it depending on your needs.
Do VA loans have lower interest rates?
Typically, VA loans tend to have lower interest rates — and if rates drop, refinancing with a VA Interest Rate Reduction Loan (IRRRL) can be easier than with a conventional loan. In many cases a VA Interest Rate Reduction Loan (IRRRL) may not require an appraisal or money out of pocket at closing.
Generally, no appraisal, credit information or underwriting is required on an IRRRL, and any lender may close an IRRRL automatically.
Funding fee: The funding fee for an IRRRL is 0.5 percent of the loan’s value, or 1 percent for an unaffixed manufactured home. Funding fees may be financed or paid in cash. Lenders can offer existing cus tomers a product to lower their payments, which may generate further business for the bank.
Closing Costs & Loan-to-Value (LTV)
Unlike with a VA purchase loan, homeowners seeking an IRRRL can finance all of their closing costs, including up to two discount points and the VA Funding Fee. IRRRL borrowers who are not exempt will need to pay the VA Funding Fee.
Verification of income for all borrowers on the VA streamline is not required. That means unlike the original VA loan when pay check stubs, W2 forms and tax returns were provided, the IRRRL requires no income verification whatsoever.
Since the VA does not require a credit check on an IRRRL transaction, it’s logical that VA loan rules also state there’s no cash back option available to the borrower. … Loan proceeds may only be applied to paying off the existing VA loan and to the costs of obtaining or closing the IRRRL.
Lenders are in a unique position with the VA IRRRL program. They have one of two options: They
- Application fee.
- Processing fee.
- Closing fee.
- Notary fee.
- Rate lock fee.
- Tax service fee.
- Trustee fee.
VA Streamline Refinance funding fee
For the VA IRRRL, the funding fee is usually 0.50% of the new loan amount. This is much less than the 2.3% to 3.6% first-time borrowers or cash-out refi applicants pay upfront. The funding fee can be waived for veterans who are disabled because of service-related lenders.
Current VA IRRRL Rates
|VA Loan Type||Interest Rate||APR|
|30-Year VA IRRRL Streamline||2.990%||3.136%|
|15-Year VA IRRRL Streamline||2.750%||2.981%|
|30-Year VA IRRRL Streamline Jumbo||3.250%||3.417%|
VA Streamline Refinance Pros and Cons
- Save money by lowering your interest rate.
- In most cases no appraisal is required.
- Employment proof is usually not needed.
- No dept to income verification.
- No minimum FICO score check.
- Change your loan terms.
- Faster closing times.
- Option to defer two months of mortgage payments.
Who qualifies for a VA IRRRL? To qualify for a VA IRRRL, you must have a current VA loan that’s been open for at least 7 months (210 days). You must also be current on your mortgage payments, and the new loan must have a clear financial benefit.