Guide to IRRRL Veteran Refinancing

Posted by Lauren Schneider on Friday, September 6th, 2019 at 10:20am.

What You Need to Know About IRRRL Veteran RefinancingVeterans and qualifying military families may have the ability to lower their home mortgage interest noticeably with a VA Interest Rate Reduction Refinance Loan (IRRRL). This is one of the most powerful refinancing options around, and the process is actually fairly simplistic compared to traditional options. Here is what veteran homeowners need to know regarding VA IRRRL's.

For informational purposes only. Always consult with a licensed mortgage professional before proceeding with any real estate transaction.

What Exactly is a VA IRRRL?

Sometimes called a VA Streamline, IRRRL is a quick refinancing option that has far fewer requirements to comparable programs such as a VA cash-out refinance. Qualifying veterans and military families may be able to use an IRRRL to refinance their current VA loan to lower rates or even convert it from an adjustable rate financing situation to a fixed rate mortgage. The convenience of the entire process is indeed streamlined for veteran's convenience.

Appraisal and Certificate of Eligibility Requirements

With a VA Interest Rate Reduction Refinance Loan, there is no appraisal or credit report required by the VA directly. However, some lenders requirements vary, and certain institutions may require appraisals or run a credit report. Applicants will want to inquire with their intended lender to explore their specific procedures. A new Certificate of Eligibility (COE) will not be required, as your prior entitlement approval is ample enough for the VA. There is also a way to confirm your COE online via the VA's email confirmation process, which can be used in lieu of a traditional form.

Key Elements of Eligibility for an IRRRL

While the process is simple and streamlined, there are a few key requirements to being eligible for this type of refinancing. First, one must have used their VA loan eligibility to buy the property that is intended to be refinanced. The VA will utilize the same entitlement from the original purchase with a VA loan.

Second, the occupancy requirements for obtaining an IRRRL are not exactly the same as other VA loans. With an IRRRL, owners only need to certify that they occupied the home at some time previously. This means that it is possible that a home bought as a primary residence that was converted into a rental property could still qualify for an IRRRL. Be sure to ask lenders about this detail.

Loan Limits and Cash Out Details

With an IRRRL, there is no cash out allowed with this type of refinancing. That being said, as much as $6,000 in extra funds can be borrowed for making home energy improvements. These improvements must be completed 90 days prior to the closing date. Lenders will be able to offer additional details.

Eligible veterans have a basic entitlement of $36,000, and lenders will typically offer loans up to four times this amount without any down payment. However, this is provided that the applicant is credit- and income-qualified and the home's appraisal is on par with the requested amount. Again, lenders vary in policy and lending limitations.

What Are IRRRL Funding Fees?

The last thing to note is that there will be a .5 percent funding fee related to most VA loans to buy a Black Forest home. In certain cases, the VA may waive this fee. For example, veterans with a service-related disability that didn't receive active duty or retirement pay may qualify for a waiver, as well as surviving spouses of veterans who passed away from a service-connected disability or during service. The funding fee, if required, can be paid from proceeds from the new loan.

For more information about IRRRL requirements and eligibility, contact the Department of Veterans Affairs housing specialists or discuss your options with your current lender. You might find that you can save a good deal of money with this refinancing option exclusively available to veterans and their families.

For informational purposes only. Always consult with a licensed mortgage professional before proceeding with any real estate transaction.

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