09 Jul Secure Lower Interest Rates with Streamline VA Loans Refinance Option
When it comes to refinancing a mortgage, the US Department of Veterans Affairs (VA) offers two VA loans refinance options-
- VA IRRRL or Streamline Refinance
- VA Cash-out Refinance
While both options come with their list of perks, if you are looking to qualify for even lower interest rates, VA Interest Rate Reduction Refinance Loan (VA IRRRL) is the best choice you got.
WHAT IS VA IRRRL?
As the name suggests, IRRRL is a VA loan refinance option that lets you refinance your existing VA loan with even lower interest rates. Unlike a cash-out loan, an IRRRL comes with easy eligibility criteria and flexible guidelines. Because it comes with fewer complications, this loan type is also sometimes referred to as the Streamline Refinancing option.
QUALIFYING FOR A VA IRRRL
To qualify for VA loans refinance benefits under IRRRL, you must meet the following conditions-
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- You have an active VA loan.
- You are borrowing IRRRL to refinance a VA loan.
- You can prove that you currently live or used to live in the house purchased through a VA mortgage.
BENEFITS OF IRRRL
The major reason most people opt for the VA streamline refinance loan option is that they can qualify for even lower interest rates. And, with your interest rates cut short, your monthly payments will also go down, accounting for some major savings.
In addition to this, these VA loans refinance options changes your adjustable interest rate into a fixed interest rate, making your monthly payments more stable.
Are there any additional benefits?
Besides helping you save thousands of dollars, VA loans refinance comes with additional benefits.
For starters, VA IRRRL does not mandate you to pay Private Mortgage Insurance (PMI). Moreover, unlike cash-out refinance, this loan type does not require you to go through a strict documentation process. In fact, you don’t even need to apply for a VA appraisal.
Because VA loans refinance options like VA IRRRL refinances only VA loans, there is no need to go through an appraisal again. So, you’ll be saving additional bucks because you won’t be paying appraisal fees anymore.
When is the best time to opt for VA IRRRL?
VA IRRRL comes with numerous benefits. However, before opting for this loan type, you must ask yourself the following questions.
What is your credit score?
Though there is absolutely no requirement for you to have an outstanding credit score, you might be able to get even lower interest rates if you have a good credit score.
So, it’s recommended that you work on your credit scores to qualify for low rates and make this VA loans refinance benefit worthwhile.
You can upgrade your credit score by clearing up any existing debts, paying pending bills and working on your debt-to-income ratio.
How long do you plan to stay in the house?
VA IRRRL is an amazing option only if you wish to reside in your house for a longer time. But, if you are on active duty, you might get a permanent change of station.
In this case, opting for this VA loans refinance option won’t be a good choice.