IRRRL Refinance Program
Updated January, 2016
IRRRL is a funny sounding name for a great program available for Veterans who currently have a VA loan. IRRRL stands for Interest Rate Refinance Reduction Loan and it is also sometimes called the VA streamline refinance.If you are interested in the IRRRL program, you will need to find a VA approved IRRRL lender who can help you understand how to apply and what the guidelines are. Each lender will have their own rates, fees and may even have small differences in guidelines – so it is important that you speak with multiple VA approved lenders who can help you understand how the program could best work for you.
The IRRRL program is designed to help you refinance your existing VA loan with a minimal amount of paperwork – which is where the term “streamline” comes from – “streamlined” paperwork. There will be less paperwork to do than when you originally got your VA loan. With the IRRRL program, you don’t have to completely re-qualify for a VA loan, in fact – many lenders don’t require a minimum credit score or even an appraisal to participate in the program.
IRRRL Program Highlights
- You can participate in the IRRRL program with your existing lender or choose to work with a different VA approved lender.
- VA requirements do not require an appraisal, credit information, or underwriting, but your lender may require these.
- It is possible to roll in closing costs and fees so there are no out-of-pocket costs.
- Your new monthly payment must be lower than your old monthly payment unless you are going from an ARM to a Fixed rate loan or the term is less than your old loan.
- It is possible to get a new VA loan that is a fixed rate or adjustable or hybrid fixed rate loan.
- It is possible to finance in energy efficient improvements into your IRRRL refinance, up to $6000.
- Cash back at closing is not allowed with the IRRRL program.
- At the time of closing, you must be current on your mortgage and you can’t qualify for the IRRRL program if you have more than 1 30 day late payment on your mortgage in the last 12 months.
These are just a few of the highlights of the IRRRL program – there are plenty of other great things about the program depending on which VA approved lender you work with. Remember – not all VA lenders have the same rules for the IRRRL program, some will have slightly different guideline requirements. For example, some lenders do not require an appraisal with the IRRRL program, some will require an AVM or even a full appraisal. Some lenders may not have a minimum credit score, some will. This is why it is important to shop multiple VA approved lenders so you know what lender will be able to help you based on your individual situation.
VA Funding Fee For IRRRL Refinance
When getting a VA loan, generally speaking it is required that you pay a “funding fee” – this fee is commonly referred to as the “VA funding fee”. The funding fee is designed to be paid by the Veteran so that it reduces the cost of the loan to the government because VA loans offer 100% financing and no mortgage insurance. The VA funding fee is a % of the VA loan amount and varies on these things:
- Type of loan
- Military category
- First time VA loan borrower (The funding fee for second time users who do not make a down payment is slightly higher)
- Down payment
It is possible to either pay the VA funding fee at the time of closing and it is also possible to “roll it into the loan” – or finance the fee. Whether it is financed or paid in cash – the VA funding fee must be paid at closing.
Not All People Have To Pay the VA Funding Fee
It is true that not all people who get a VA loan are required to pay the funding fee. When getting a VA loan, you don’t have to pay the fee if:
You are a Veteran receiving VA compensation for a service-connected disability
You are a Veteran who would be entitled to receive compensation for a service-connected disability if you did not receive retirement or active duty pay
You are a surviving spouse of a Veteran who died in service or from a service-connected disability.
IRRRL Lenders: What You Want To Know
Each lender will require slightly different things for the IRRRL program – and if you have been turned down by one lender, it doesn’t mean that you can’t participate in the program. If you have a low credit score, owe more than your house is worth or have other special-needs in your situation, it is important that you speak with multiple lenders to see which one can best help you. Even if you have great credit and lots of equity in your home, it is still important to speak with multiple lenders because each one will have their own rates and fees – and you might be surprised to see how much you can save just by shopping around a little bit!
Ready to get started? Submit your information below and we will match you with a great VA approved lender who can give you a written rate quote on an IRRRL refinance.