When you think of refinancing, you probably picture mounds and mounds of required paperwork to get your loan processed. The good news is that this is not the case with the VA Streamline Refinance.
The only IRRRL documents required to lower your interest rate are documents that prove that your housing payments are made on time; that you currently have a VA loan; and that you previously occupied the property. Generally, that is all that you need unless a particular lender has additional requirements based on what they see in your application.
Housing History Timeline
In most cases, you will not even need to prove your housing history to the lender because they can obtain it themselves. Mortgage payments are almost always reported to the credit bureaus, so the lender can verify your timely payments from your credit report or they can call the lender themselves and verify your payment status.
If the lender is not able to retrieve your information the traditional way or they require written proof of your payments, you can provide canceled checks that show the date you made your payments or 12 months’ worth of statements from your lender showing your payment each month.
Proof of a Current VA Loan
Because you need to have VA entitlement in order to obtain a VA loan, the new lender simply needs to determine that you currently have a VA loan in order to process the IRRRL. If you currently have a VA loan, it is obvious to the lender that you have entitlement and because you cannot take any additional money out of the home, the amount of your entitlement used remains the same. You can prove your current VA loan with the Mortgage Note you were provided at the closing. This will show the lender that you have a VA loan as well as the interest rate you currently pay.
Prove a Lower Payment
The largest requirement of the VA IRRRL program is that you lower your payment. This is another stipulation that can be verified with your current mortgage statements and/or the Mortgage Note. The new lender can verify the interest rate you pay now as well as the total mortgage payment as stated on your mortgage statements. Most lenders require your payment to be lower by at least 5% in order to qualify for the IRRRL program.
There are exceptions to this rule, however; if you currently have an adjustable rate mortgage, which the lender can verify on the Mortgage Note, and you refinance into a fixed rate, your payment may not decrease. This is acceptable for the VA and most lenders because a fixed rate is much less risky than an adjustable rate which has the possibility of adjusting annually.
Prove Previous Occupancy
One of the largest requirements of the original VA loan you took out was the fact that you must live in the home. VA loans are not written for investment or vacation homes – they are strictly to help veterans secure a primary residence. The IRRRL program is slightly different, though. This program simply requires that you prove that you previously lived at the property. You can prove this simply by signing a document stating that you occupied the property for the 12 months’ prior to your application for the refinance.
IRRRL Documents are Easy to Provide
As you can see, the IRRRL documents required are very simple. If you do not have access to your mortgage note, you can always contact your current lender to obtain a copy. The same is true for your mortgage statements, unless you contact your bank for your canceled checks.
Because you do not need any type of income documentation or credit documents, the IRRRL can be completed in a very short amount of time. If you are refinancing to save money every month or because you have to transfer to another area and purchase a home there due to your active duty, it can be done rather quickly. The main requirement is that you have your mortgage payments made on time, with only one late payment in the last 12 months. Aside from that, if you are lowering your payment, you should be an easy approval for the IRRRL program!