What is a VA Streamline Refinance?
A VA Streamline Refinance is known as an Interest Rate Reduction Refinance Loan (IRRRL) by the government. In order for a loan to qualify as a VA Streamline refinance the existing loan being paid off must be a VA loan. The IRRRL allows you to refinance your current mortgage interest rate to a lower rate than you are currently paying often with minimal or no closing costs.
The VA Streamline loan process is easy compared to other loan programs: once you have already been approved for your initial VA purchase loan, it is relatively simple to lower your interest rate and experience savings. In most cases, there is less documentation and the loan process moves much faster than a standard transaction.
Closing costs can be rolled into the cost of the loan, allowing veterans to refinance with no out-of-pocket expenses. For most veterans, it is beneficial to take a slightly higher interest rate in exchange for a lender credit covering most or all of the closing costs. Your loan officer can go over the pros and cons of each situation to make sure you are picking the best option on any given day.
Requirements for a VA Streamline Refinance:
- Be current on your mortgage with no more than one 30-day late payment within the past year.
- Your new monthly payment for the IRRRL must also be lower than the previous loan’s monthly payment. (The only time this condition does not apply is if you refinance an ARM to a fixed rate mortgage.)
- You cannot take any cash out on an IRRRL.
- You must certify that you previously occupied the property, although you can still do a streamline refinance even if the property is currently rented.
- You must have previously used your VA Loan eligibility on the property you intend to refinance
You do not have to use your current lender when doing a VA Streamline Refinance. It is beneficial to check around with various lenders to ensure you are getting a fair deal.