05 May Refinancing 101: What Is An Interest Rate Reduction Refinance Loan?
Looking for a way to reduce your VA mortgage monthly payments? There might be away. Yes, we’re talking about the VA Interest Rate Reduction Refinance Loan (IRRRL).
Qualifying for VA loans comes with a number of benefits like you don’t need to make a downpayment, you can qualify for the lowest interest rates, and they come with easy eligibility criteria.
But, if you are financially struggling to make your monthly installments for these loans, you can apply for the VA IRRRL. The interest rate reduction refinance loan allows you to refinance your existing VA loan for even lower interest rates.
Read on to find out why qualifying for a VA IRRRL is worth it.
A Glance On VA IRRRL
VA IRRRL is a refinancing mortgage guaranteed by the US Department of Veterans Affairs (VA). Popularly known as streamlined refinance, the loan is relatively easy to qualify for and comes with a streamlined application process.
Unlike a VA purchase home loan, where you have to apply for the dreaded VA appraisal, this loan does not require you to qualify for a VA appraisal. Neither are you required to apply for the VA Certificate of Eligibility (COE) again.
When it comes to the terms and conditions of the loan, everything is pretty relaxed. While applicants who have an ongoing VA loan are already eligible for VA IRRRL, they must apply for it by getting in touch with VA-approved private lenders. Moreover, there is no cap on how much you can borrow. However, the amount you qualify to borrow depends on your VA entitlement.
The only primary requirement for qualifying for this mortgage is that you have an ongoing VA loan and are able to get lower interest rates if you are eligible for an IRRRL. If there is no decrease in the interest rate, you are not qualified for this refinancing option. In addition, you must have an ongoing VA loan to qualify. Non-VA loans can not be eligible for VA IRRRL.
In addition to lowering your interest rates, one major reason why qualifying for a VA IRRRL is worth it is that it changes your adjustable mortgage to a fixed mortgage.
Eligibility Criteria For VA IRRRL
To establish your eligibility for the VA home loans, all of the following conditions must be met-
- You have an ongoing VA home loan.
- You are willing to use IRRL to refinance an existing VA mortgage.
- You can prove that you currently live or used to live in the house for which you are getting the refinance mortgage.
Applying For VA IRRRL
To get started with your VA interest rate reduction refinance loan application, contact a VA-approved lender. While selecting the lender, it is wise to choose from at least three lenders so you can get the best rate.
After selecting the lender, provide all the necessary information related to your loan and credit history. Pay the closing cost and you’re all set. It’s that easy.
If you are wondering how many times can you refinance a VA loan, the answer depends upon your entitlement and the rates you’re getting. If the rate offered is less than what you currently have, you can qualify for the loan how many times you want.
To sum up, among the different types of refinance mortgage loans, VA IRRRLs are perhaps the best bet as they come with easy eligibility criteria and a smooth application process.