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August 6, 2021   /   Andrew Sheaffer

If you have a current VA mortgage loan and have thought about refinancing to take advantage of extremely low interest rates but have held back because you think the process may not be worth the time, effort or upfront cost, the VA’s IRRRL program could be the perfect fit.  

IRRRL – pronounced “earl” – is a simple, streamlined refinancing program available to veterans and or their family members with an existing VA loan.  While the IRRRL program is not a widely known program, it’s actually one of the easiest ways to refinance a mortgage.  

Not only can prospective borrowers bypass the appraisal and credit underwriting processes in some cases, but they can also avoid any out-of-pocket costs at closing.

VA IRRRL may sound like an intimidating acronym, but the point of the program is to cut out much of the red tape when refinancing.  There are many great benefits offered through the program and knowing the basics is an important first step for interested veterans.

Here are nine VA streamline refinance guidelines you should know before you get started.

1. The abbreviation “IRRRL” stands for Interest Rate Reduction Refinance Loan.  It’s often simply called a “VA Streamline Refinance” because that’s just what it does – it helps streamline the process for borrowers.

2. The VA does not require credit underwriting or an appraisal through the IRRRL program. However, some lenders may require both depending on their own internal guidelines and each homeowner’s specific situation.

3. Borrowers are only eligible under the IRRRL program if the property being refinanced was originally purchased using a VA loan.  In other words, it must be a VA to VA refinance and reuse the original entitlement.

4. IRRRL can be done with no money “out of pocket” by including the VA funding fee, which is the lowest among all VA loan programs, in the new loan or by making the new loan at an interest rate high enough to enable the lender to cover the costs.

5. Borrowers cannot receive any “cash back” at closing through the program.  If getting cash back is important, veteran homeowners may want to consider a different route.

6. If the interest rate on the current VA mortgage is fixed, the interest rate on the new VA loan must be lower than the interest rate on the current loan when the VA IRRRL transaction is ready to close.  This is where the program gets its name.

7. With an existing Adjustable Rate Mortgage (ARM), the interest rate can be higher than it is on the current loan, as long as the new interest rate is a fixed rate under the VA IRRRL program.

8. The occupancy requirement for an IRRRL is different from other VA loans.  To add to ease, homeowners simply need to certify that they previously occupied the property as opposed to certifying they intend to occupy the property after closing.

9. Veterans can use any VA approved lender.  The hardest part of the process might be finding an optimal combination of a great rate and a banker with expertise working with veterans.  Be wary of deals that sound too good to be true – shop around!

If you have a VA loan with a high rate or are interested in making stable monthly payments by having a fixed rate, refinancing through the IRRRL program could be a good decision.  Countless veterans across the country have chosen this program as an easy and straightforward way to go through refinancing the process.  Remember “streamlined” as the keyword and the VA streamline refinance guidelines in this article can help you determine whether the IRRRL program is the right decision for you.

About West Town Bank & Trust

At West Town Bank & Trust, our most important goal is to understand what’s important to you, what’s getting in your way, and what you hope to achieve, so we can help you get there. Since 1922, we’ve been creating long-lasting relationships with our customers based on old-fashioned values and future-thinking ideas.  Whether solutions come from surprisingly innovative tools or trusted products you’re familiar with, our single-focused purpose is your financial well-being.

Whether you’re purchasing your first home or refinancing an adjustable rate mortgage, it’s our commitment to find the most suitable loan program available to you at the lowest rate possible. With hundreds of programs available, let us help you unlock the feeling of home today.