VA Streamline Refinance (IRRRL)

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

A VA streamline refinance may involve a funding fee, unless you qualify for an exemption, as well as closing costs. Depending on the loan, some costs may be financed rather than paid at closing; financed costs increase the loan balance and total cost. Ask for current terms before deciding.

The applicable funding fee and total refinancing costs depend on your circumstances, including any exemption and the terms of your new loan.

Should you Take Advantage of the VA Streamline Refinance?

If you qualify, a VA streamline refinance may be worth considering. Compare the new rate, APR, payment, fees and total cost against your current loan; a lower monthly payment does not necessarily reduce lifetime costs.

I’d be happy to review the available VA streamline refinance terms with you and discuss whether they fit your goals.