The VA Streamline Refinance Loan

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Current VA loan borrowers have multiple options when refinancing including the VA streamline refinance, otherwise known as the VA Interest Rate Reduction Refinance Loan (IRRRL).

The streamline refinance program gives VA borrowers a chance to refinance with little verification. VA lenders may rely on the borrower’s payment history and forgo the traditional credit check and appraisal. Borrowers don’t even have to verify their income.

The VA created the streamline refinance loan to give veterans a chance to refinance with little cost and verification if they benefit from the refinance. Known as the net tangible benefit, borrowers must prove they benefit from the refinancing by securing a lower interest rate or refinancing out of an adjustable rate loan to a fixed rate loan.

If borrowers benefit from refinancing, the VA streamline loan can be a great option.

Qualifying for a VA Streamline Refinance Loan

Unlike qualifying for a VA purchase loan, the VA IRRRL program has very few requirements, including:

• Proof you previously occupied the property – You must only prove that you previously occupied the property as you promised when you took out your VA purchase loan. You don’t need to live there currently.
• Proof you made your mortgage payments on time for the last six months – Most lenders look back over your 12 month history, allowing only one 30-day late in that time, but all payments over the last six months must be on time.
• Proof that you benefit from the refinance – This is the net tangible benefit we spoke about above. You must prove that you somehow benefit from the new loan.

That’s all the VA requires. You don’t need to pay for another appraisal, submit to a credit check, or supply your income documentation. As long as you prove you afforded your previous loan payment and the new loan payment is lower or less risky, you are a good candidate for the VA streamline refinance program.

The VA IRRRL Funding Fee

All veterans pay the same funding fee on the VA streamline refinance in Colorado. In 2020, the fee is 0.5 percent of the loan amount. You may be able to wrap this fee and your closing fees into the loan, though, coming to the closing with no money out of your own pocket.

Compared to the 2.3 percent funding fee you paid when you took out the loan, the VA IRRRL funding fee offers significant savings, making it possible for veterans to afford refinancing.

Should you Take Advantage of the VA Streamline Refinance?

Every dollar saved adds up. If you pay higher interest rates than are available right now, consider refinancing. You’ll save money each month, as well as over the life of the loan. Lower interest rates mean you pay less for the loan over its lifetime. It may also be easier to make extra principal payments and pay your loan off faster.

I’d be happy to discuss the savings you’d have if you refinanced with the VA streamline refinance loan. Let’s talk today and see how a VA IRRRL may help you improve your financial situation and maybe even own your home faster.

Purchase Qualifier Refinance Rate Checker