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VA Streamline IRRRL Refinancing

If you currently have a VA Loan and would like to refinance, your best option is to do so with VA Streamline Refinancing, otherwise known as the Interest Rate Reduction Refinance Loan (IRRRL). Refinancing with the IRRRL, is quick and easy if you are an existing VA Loan borrower, since you are going from one VA program to another, and you will receive lower monthly payments.

There are only two conditions outside of the military requirements:

  • The borrower will need to certify that they either previously or currently occupy the house
  • The borrower may not obtain any cash back as a result of the IRRRL

Some benefits of the IRRRL are:

  • You will need little to no money out-of-pocket
  • In some instances, you won’t need another appraisal completed
  • No need to acquire another Certificate of Eligibility (COE)

Instead of handing over cash during the refinancing process, you have the option to include the fees and closing costs in with the new refinanced loan.

What does a reduced interest rate look like for you?

Interest rates are currently low, and you could possibly save tens of thousands of dollars over the life of your loan by receiving even a half of a percentage reduction to your interest rate.

Here are a few examples of how that could look. Please keep in mind though, the following chart is for demonstration purposes only. Several factors go into the cost of a mortgage. To get an accurate look at what your specific situation could look like, ask your loan specialist.

Interest Rate Reduction Amount Saved with 30 Year Term
150K 0.5% Interest Reduction $19,033.75
150K 1% lower Reduction $32,696.48
250K 0.5% lower Reduction $31,254.16
250K 1% lower Reduction $54,494.12
350K 0.5% lower Reduction $43,755.83
350K 1% lower Reduction $76,291.77
450K 0.5% lower Reduction $56,257.50
450K 1% lower Reduction $98,089.43

To summarize, here’s what you need to know about the VA Streamline Refinancing, or the IRRRL:

  • Any fees and closing costs may be included in the new refinanced loan
  • Borrower has to be current on their current mortgage
  • Within the last year, borrower cannot have more than one 30-day late payment
  • Processes is quick and easy, especially compared to the original VA Loan process
  • You may refinance loan at an adjustable or fixed interest rate
  • Your new monthly payment with the IRRRL has to be lower than your previous monthly payment unless you have an adjustable interest rate

Additional benefits include:

  • There may be no costs out-of-pocket
  • In most cases, you don’t need another appraisal completed
  • You will not be required to obtain another Certificate of Eligibility (COE)

Contact one of the loan specialists in our network today to learn how your specific situation works with VA Streamline Refinancing.

VA Loans

Military Loans are personal loans designed exclusively for military personnel (active duty and career-retired).  Most online Military Lenders advertise their cash loans ranging from $500.00 to $10,000.00, and offer their customers the ability to easily apply online.  Knowing what to expect from the VA Home Loan process can be very daunting, especially if you are first time home buyer.  However, as with everything in life, the more you know, the more prepared you will be when taking the first steps toward home ownership.  Military loans can be a good way to pay for emergencies, minor purchases, vacations, or for consolidating other debts that are at a higher interest rate than the military loan rate.

The VA Home Loan Guaranty Program offers advantages that other loan programs do not. The major advantage of the VA home loan program is that most VA loans are made with little or no down payment.

The exact amount of a veteran’s entitlement is shown on the Certificate of Eligibility. Veterans who do not have this document should contact their nearest VA regional office.

Veterans can use their entitlement to purchase, build, alter, improve, refinance or repair a home. There is no requirement that the entitlement must be used within a certain period of time except for members of the Reserves and National Guard who must use their entitlement by Oct. 28, 1999. VA home loan eligibility remains available until used.

To be eligible for a VA home loan, a veteran must have been discharged under conditions other than dishonorable, after serving a minimum period of time on active duty, depending on the period of service. Active-duty-for-training does not qualify an individual for VA home loan benefits.

Most military lenders claim to deposit the money in the borrowers checking or savings account within 48 hours of the loan offer being signed / ESIGNED by the military borrower. Process details vary from lender to lender.

Military loan terms typically range between 6 to 36 months. The length of the loan term is determined by the amount of money borrowed and the service member’s Estimated Time in Service (ETS). In addition, other military lender specific factors may influence the length of the military loan term. Military Loans are capped at 36%. That said, before you accept a military loan offer make sure to closely review the loan contract and inspect the “Truth & Lending” disclosure document. Unlike mortgage applications, military personal loans DO NOT require a large pile of confusing documents to complete the contract process. So finding the interest rate, fees and other important details should be rather easy in comparison to a mortgage application.

The actual interest rate will likely vary from lender-to-lender and applicant-to-applicant. The military lender reviews each application for military specific information and typically require a copy of the service members most recent LES and a copy of their Military ID. The military lender may or may not require each applicant’s credit to be pulled. Before applying, you should review the military lender’s loan application requirements.

This information is designed to help you navigate the benefits offered to veterans and their families so that you can get everything you deserve.

Get started today:

VA Home Loan Program, Step by Step

It is fairly easy to finance a home under the VA Home Loan Program.

Here’s How:

  1. Obtain counseling.

This isn’t required under the VA Home Loan Program, but it’s certainly a good idea — especially for the first-time home buyer. Prepurchase counseling gives you information on

  • The process of buying a home
  • The key players in the home-buying process
  • Debt management

Housing counseling is usually free. The Department of Housing and Urban Development (HUD) maintains a toll-free number and Web site for this purpose. To locate a nearby housing counseling office, call 800-569-4287, or visit HUD’s Web site at www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm

  1. Find a home

Look for the home of your dreams, and once you find it speak with the seller or Realtor about purchasing. You can sign a contract to purchase if it’s conditioned on approval of your VA home loan.

  1. Select a lender

Almost all lenders participate in the VA Home Loan Program, but you should still look around to find the best possible terms.

  1. Obtain a Certificate of Eligibility

The VA has to certify that you are eligible for the program, and will give you a certificate. Lenders can obtain the certificate for you through the Automated Certificate of Eligibility (ACE) system. This can save you days and days of time, so ask you lender about the option.

If your lender doesn’t have access to ACE, you can apply for a Certificate of Eligibility by submitting a completed VA Form 26-1880. You can obtain this form from any VA regional center (see Appendix B) or print it from the VA’s Web site at www.vba.va.gov/pubs/forms/vba-26-1880-ARE.pdf.

Proof of military service is also needed.

Mail the completed application to VA Loan Eligibility Center, P.O. Box 20729, Winston-Salem, NC 27120. For overnight delivery, VA Loan Eligibility Center, 251 N. Main St., Winston-Salem, NC 27155.

  1. Get a VA appraisal

The VA assigns a licensed appraiser to determine the value of the property. The appraiser issues a Certificate of Reasonable Value. The VA guarantees the loan, not the condition of the property, so in addition to the appraiser you should hire your own inspector.

  1. Wait

Wait for the lender to let you know the status of the loan. This can take awhile if your employer is slow in returning verification, or if your credit rating needs to confirm with out of state creditors. It should take about 4 to 6 weeks to hear back on a decision.

  1. Attend the loan closing

The lender will explain the loan terms and how to make monthly payments. You will sign the related papers, and you’re all set.

  1. Move in!

The loan is sent to the VA for guaranty, and you can move into your new home. The VA annotates your Certificate of Eligibility to reflect the use of entitlement, and returns it to you.

Service Requirements for VA Home Loan

Almost all veterans are eligible for a home loan. (However, you cannot hold a discharge that the VA considers dishonorable).

The categories for eligibility include:

Wartime service: Veterans who served at least 90 days on active duty during the periods listed here are eligible. For these periods, the active-duty time is not required to be continuous.

  • World War II: September 16, 1940, to July 25, 1947
  • Korean War: June 27, 1950, to January 31, 1955
  • Vietnam War: August 5, 1964, to May 7, 1975

Peacetime service: To qualify for the VA Home Loan Program for peacetime service, you must have served at least 181 days of continuous active duty during the following periods. Active duty for training doesn’t count.

  • July 26, 1947, to June 26, 1950
  • February 1, 1955, to August 4, 1964
  • May 8, 1975, to September 7, 1980 (enlisted)

May 8, 1975, to September 7, 1980 (enlisted) or October 16, 1981 (officer): If you are a veteran who joined the military for the first time after these dates, you must meet certain minimum active-duty requirements to qualify. You qualify if at least one of the following points applies to your time of service:

  • Completed 24 months of continuous active duty
  • Served the full period (at least 181 days) for which you were ordered or called to active duty from the reserves or National Guard
  • Completed at least 181 days of active duty and were discharged for a hardship or a voluntary early-separation program
  • Were discharged with less than 181 days of service due to an involuntary reduction in force, certain medical conditions, or in some instances, for the convenience of the government

Gulf War service: If you served on active duty during the Gulf War (October 2, 1990, to a date yet to be determined), you’re eligible if you meet any of the following conditions:

  • Completed 24 months of continuous active duty
  • Served the full period (at least 90 days) for which you were ordered or called to active duty from the Reserves or National Guard
  • Completed at least 90 days of active duty and were discharged for a hardship or a voluntary early-separation program
  • Were discharged with less than 90 days of service due to an involuntary reduction in force, certain medical conditions, or in some instances, for the convenience of the government
  • 16, 1981 (officer)

Reserves and National Guard: If you have completed a total of six years in the Selected Reserves or National Guard (that means you were a member of an active unit and attended required weekend drills and the annual two-week training), you’re eligible if you

  • Received an honorable discharge
  • Were placed on the retired list
  • Were transferred to the Standby Reserve or an element of the Ready Reserve other than the Selected Reserve after service characterized as honorable service
  • Continue to serve in the Selected Reserves

If you were discharged in any of these first five categories due to a service-connected disability before you completed the required time, you’re still eligible for the VA Home Loan Program.

If you are an active duty member still serving in the military, you can receive a home loan before you are discharged. You must have served 90 days, but this will change to 181 after an end period for Gulf War service is established.

Active-duty members: If you’re still in the military, you can benefit from the VA Home Loan Program before discharge. To qualify, you must have served at least 90 days. This will change to at least 181 days after the president establishes an end period for Gulf War service.

Spouses: Spouses of certain veterans, including veterans of the Reserves and National Guard, are also eligible to receive a VA Home Loan guarantee. You’re eligible if you are

  • An unmarried spouse of a veteran who died while in service or from a service-connected disability
  • A spouse of a service person missing in action or a prisoner of war

A surviving spouse who remarries upon or after turning 57 and on or after December 16, 2003, retains her eligibility for the VA Home Loan Program. However, a surviving spouse who remarried before December 16, 2003, and upon or after reaching age 57, is not eligible.

Financing Your Dream Home

Since 1944, the VA Home Loan Program has guaranteed more than 18 million loans to veterans to construct or purchase a home, or refinance another home loan. Eligible veterans can finance up to $417,000, (or $729,000 in high cost areas), without a down payment.

It’s Not a Loan, but Guaranteed Financing
The VA does not actually lend you money, but guarantees your loan to the lender, so you become a favorable candidate. Credit and income standards become less strict once the government guarantees your loan.

You May Use VA-Guaranteed Financing

  • To buy a home
  • To buy a townhouse or condominium unit in a project that has been approved by the VA
  • To build a home
  • To repair, alter, or improve a home
  • To simultaneously purchase and improve a home
  • To refinance an existing mortgage under more favorable terms
  • To improve a home through installment of a solar heating and/or cooling system or other energy-efficient improvements
  • To buy a manufactured (mobile) home and/or lot
  • To buy and improve a lot on which to place a manufactured home that you already own and occupy
  • To refinance a manufactured home loan in order to acquire a lot

There are some restrictions. While you can use the loan to buy or build a property containing more than one unit, the total number of separate units cannot be more than four if only one veteran is buying. If more than one veteran is buying, then an additional family unit can be added to the four for each veteran. One veteran can buy four units, two veterans can by six units, three veterans can buy seven units, etc.

In addition, if the veteran must depend on rental income from the property to qualify for the loan, the veteran must:

  • Show that she has the background or qualifications to be successful as a landlord. For example, the VA would want to know if the veteran has been a successful landlord in the past or has experience working with a rental agency.
  • Have enough cash reserves to make the loan payments for at least six months without help from the rental income.

Knowing How Much Uncle Sam Will Guarantee

Your basic entitlement is $36,000 if you meet the eligibility requirements. To the lender, this is the same as making a $36,000 down payment. The VA will guarantee $36,000 for loans of $417,000 or less. If you borrow more than $417,000, the VA guarantees 25 percent of whatever the conforming loan limit is for the county in which your new home is located. The conforming loan limit is the amount that the federal government advises banks to limit mortgage loans to for homes in specific areas. In 2008, the limit was $417,000 in the continental United States and $625,000 in Hawaii, Alaska, Guam, and the U.S. Virgin Islands. Beginning January 1, 2010, rates should be available on the FHA’s Web site at portal.hud.gov.

The VA can guarantee 25 percent of $729,000, but that is the maximum.

Before you sign up: VA Home Loan restrictions

There are several factors to consider in deciding whether or not a VA Home Loan is your best option.

You cannot default on your loan. The guarantee of the loan must be repaid, like any loan.  The VA guaranty protects the lender against loss, and encourages the lender to give a loan with favorable conditions for the veteran, but if you fail to make your payments, you could lose your home to foreclosure. If the lender doesn’t take the loss, you must pay back what the VA pays to the lender.

If your loan closed on or after January 1, 1990, you only owe the government if the default involved fraud, misrepresentation, or bad faith on your part. This is a case-by-case basis determined by the VA. For example, if you’re still in the military and you knew you had change of assignment orders that would preclude you from meeting the initial occupancy requirements, the VA considers that “bad faith.”

If you do default on your loan, you cannot receive another one until you repay the VA. Once you repay the VA in full you can reestablish your eligibility to use the VA Home Loan Program if your previously financed property has been sold. You can also sell the home to another veteran, who can assume the remaining loan balance, and then you can use the VA Home Loan benefit again.

If you still own the home, and have repaid the loan, you can get another loan guaranteed by the VA.

One disadvantage of the VA Home Loan Program is that you have to pay a funding fee. This goes toward the cost of the benefit, which reduces the cost to taxpayers. This fee is often part of the amount of the loan. The fee amount depends on the down payment and your status.

You must buy a home in the US. You cannot use the loan to purchase a home outside of the United States or its territories.

You have to live on the property for a certain amount of time. You or your spouse must occupy the house within 60 days of closing. This can be extended with VA approval, but will not be extended beyond 12 months.  You can rent or move out after the initial period of occupancy, but you must live there first. There is no law that says how long you must live in the home, but if you move out quickly it could be considered bad faith by the VA.