Obtaining an Interest Rate Reduction Refinancing Loan, better known as IRRRL is a great way to lower interest rates and monthly payments just by refinancing your VA mortgage. Because today there are lower interest rates, it makes the IRRRL even better to VA homeowners.
IRRRL does not require any out of pocket expenses for the borrower. All of your costs can just be rolled into your new loan. Although there are not out of pocket expenses borrowers should be aware of the VA refinance funding fee.
What Is A Funding Fee?
A VA refinance funding fee is a fee charged by the VA at the time you obtain your loan. This is the only fee that is required by the VA. So remember that if a lender tries to tell you there are closing costs for your loan know that this is not true. So to recap an IRRRL Funding Fee is the only fee associated and required by the VA or an IRRRL loan.
The funding fee is 0.5% for IRRRLs. This fee can be paid in cash at closing or it may be included in the new loan.
The Funding Fee will replace you having a monthly charge for mortgage insurance. You are not required to take out private mortgage insurance which is typically the case for a conventional loan. The cost is deferred, instead, with the 0.5% funding fee.
*Veterans receiving disability benefits or VA compensation may be exempt from the IRRRL funding fee.
When talking with lenders make sure you discuss all fees that they include and make sure you are getting the best deal.
If you tend to refinance frequently this loan may not be the option for you because you will have to be paying a lot more with your funding fee for each time you refinance. So make sure you talk to a lender and go over all your options to make sure an IRRRL loan is right for you.
Now that you have all the fees explained are you ready to get started? Take a minute to fill out the short form below to get matched with a VA-approved today!