How to Refinance a VA Loan with IRRRL

If you currently have a VA loan and want to take advantage of lower interest rates to lower your monthly mortgage payment, the Interest Rate Reduction Refinance Loan (IRRRL) might be right for you!

Often referred to as a “Streamline” refinance, IRRRL’s can be relatively simple and stress free for borrowers. In most cases, they require little paperwork since borrowers are moving from one VA product to another. And bonus, with an IRRRL you could have little-to-no out-of-pocket costs.

But if you do find yourself having to pay closing costs, one nice thing about this loan is you can actually roll those payments into your monthly mortgage, still keeping your cash in your pocket!

Reasons You Need an IRRRL

Your interest rate is lower. If you’ve been keeping an eye on the interest rates, then you might know when to strike. Most families choose to refinance because a lower interest rate will reflect in a lower monthly mortgage payment.

Lower funding fee. VA loans have a one-time fee called a “funding fee” that is typically paid at closing or in some cases added to the monthly mortgage payment.

VA Streamline Refinancing Requirements

Remember when you first pre-qualified for your home? The first step to this process looks similar to that. Mainly because like your first loan, you’re moving forward with another mortgage. (This new mortgage will pay off the old one.)

Remember that in order to qualify for a VA IRRRL, you must have a VA loan. If not, then unfortunately you’re not eligible to refinance with an IRRRL.

For many lenders, there will be specific requirements in place to acquire an IRRRL. They may look at how long you’ve had your current mortgage, how many mortgage payments you’ve already made, and if anything has changed in your current financial situation.

They also may take into consideration your:

  • Credit score

  • Loan-to-value ratio (LTV)

  • Appraisals

What else you’ll need

If you have the Certificate of Eligibility (COE) that you used initially to get your VA Loan, make sure you present that to your lender. Also keep in mind that you’ll need to pay the VA funding fee, this is a one-time fee that lowers the cost of your loan for taxpayers since your VA home loan doesn’t require a down payment or mortgage insurance (PMI). If you have to pay closing costs or want to pay them instead of rolling them into your mortgage payment, make sure you save enough before the time comes.

If you’re ready to take a look at your options, we’re here to help!