Refinance Your VA Home Loan with a VA IRRRL.
A VA Interest Rate Reduction Refinancing Loan (VA IRRRL), also known as a VA Streamline Refinance, is an easier, faster, and less expensive refinancing option that allows for qualified borrowers to take advantage of lower interest rates or to shorten the mortgage repayment period.
There are several benefits to refinancing a mortgage with a VA IRRRL, including:
- Get a lower interest rate. When interest rates are low, refinancing can reduce your monthly payment and help you build equity in your home faster. The general rule is to consider refinancing if your interest rate would drop by at least 0.50% to 1%.
- Switch to a different loan type. While a fixed-rate mortgage allows homeowners to lock in their rate for a long period of time, an adjustable-rate mortgage (ARM) may offer a lower starting rate and more affordable monthly payments at least in the initial years of the loan. Depending on your financial situation, it may make sense to switch your current mortgage to a different type of loan – especially switching from a variable to a fixed-rate mortgage to provide stable payments over the life of the loan.
VA IRRRL Requirements
Homeowners interested in refinancing with a VA Interest Rate Reduction Refinancing Loan must currently have a VA-backed home loan. Other requirements include a credit review and verification that the homeowner is a current or previous resident of the home covered by the current loan. If you have a second mortgage on your home, the holder of that loan must agree to continue being the second mortgage so that your new refinanced loan will be considered the first mortgage. In addition, you can only refinance with a VA IRRRL if your new rate is lower than your current one.
Unlike other types of mortgage refinances, homeowners don’t always need to verify income or pay for a full property appraisal in order to qualify for a VA IRRRL—which means less paperwork and a quicker approval process. If you obtained your original VA-backed loan from another lender, an appraisal may be required.
As with all VA loans, homeowners must pay the VA funding fee—0.5% of the loan amount—although the VA funding fee may be reduced or waived based on a Veteran’s disability status. For example, you may qualify for exemption if (1) you are a Veteran with a service-connected disability, (2) a servicemember on active duty who received the Purple Heart, or (3) you are the surviving spouse of a Veteran who died in service or from a service-connected disability. Check the VA website for more information.