Updated January 2017
IRRRL Closing Costs
The Interest Rate Reduction Refinancing Loan (also known as VA IRRRL) is for veterans who already have a mortgage loan and want to refinance that loan at a lower rate. This loan does not have any out of pocket expenses for the borrower, but it does have VA refinance closing costs that are associated with the loan. These closing costs can be added into the loan amount which can be paid up front or with 15 to 30 years on interest on them.
Below are some typical VA Refinance closing costs associated with IRRRL.
- Origination fee (see below for more information on this fee)
- Discount points
- Prepaid taxes and hazard insurance
- Title examination fee
- Title insurance fee
- Flood zone determination
- Environmental endorsements
- Recording fees
- Special mailing fees (such as Federal Express or similar)
- VA funding fee
Another fee to be aware of is the Origination Fee. This fee is limited to 1% of the loan amount. The lender can choose to charge the 1% flat fee or to itemize the following list of fees as long as they don’t exceed 1%.
This guideline is interpreted differently by each lender, so ask your VA lender how the fees will be broken down.
- Lender’s appraisals (if a 2nd appraisal was required)
- Lender’s inspections, except in construction loan cases
- Loan closing or settlement fees (charged by title companies generally)
- Document preparation fees (lender charged)
- Preparing loan papers or conveyancing fees (charged by title company or lender)
- Attorney’s services other than for title work
- Interest rate lock-in fees (if you locked in for extended periods like 90 days)
- Postage and other mailing charges, stationery, telephone calls, and other overhead (lender charged)
- Amortization schedules, pass books, and membership or entrance fees
- Escrow fees or charges (costs for escrow, not your actual escrow)
- Notary fees (similar to closing fees)
- Commitment fees or marketing fees of any secondary purchaser of the mortgage and preparation and recording of assignment of mortgage to such purchaser
- Trustee’s fees or charges
- Loan application or processing fees
- Fees for preparation of truth-in-lending disclosure statement
- Fees charged by loan brokers, finders or other third parties whether affiliated with the lender or not, and tax service fees.
Save On Closing Costs
The best way to save on closing costs for IRRRL is to speak with many different VA approved lenders. make sure you get a written estimate of closing costs for your unique situation. When you compare each lenders closing costs side by side you will be able to clearly see who will be the best lender for you.
Educate yourself on all IRRRL fees so you are not surprised later on. With that said the VA IRRRL is a great benefit for veterans who qualify!
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