The VA Streamline Refinance allows for the refinance of a VA loan with little verification. Without any income documents or an appraisal, how quickly can you close? The answer depends on many factors, starting with the chosen lender. Here we will look at the factors affecting the time the VA IRRRL takes and how you can speed it up.
Choosing the Right Lender
First, talk to different lenders. You will want to know the rates and costs of taking out a loan with them. Additionally, you should ask about their turnaround time. How quickly can they close a loan? This answer likely differs from week to week. It depends on a lender’s workload. Some weeks may be busier than others, especially when rates drop. If more people, like you, decide to refinance via the VA streamline program, the turnaround time may increase.
As you shop around, let the turnaround time be a factor in your decision. As you compare Loan Estimates and make sure you get the best deal, focus on your timeframe too. Do you need the loan quickly? Are you struggling to make your payments on time now? If so, you will need a lender who can turn the loan around fast. This way you can lower your payments faster and avoid default. If you are not in a hurry, though, you can focus more on interest rates and costs.
Providing the Documents Quickly
The VA IRRRL program does not require many documents. But, there are some things you will need to give the lender no matter who you use. The faster you do so, the quicker you can close on the loan. Generally, lenders require:
- Settlement Statement from your original closing
- Bank statements if you pay any closing costs out of pocket
- Loan number and lender name for current VA loan
- Proof you lived in the property as your own
- Signed statement acknowledging the effects of refinancing
The quicker you provide the necessary documents, the better. Each lender differs in their requirements. The above documents are the VA’s minimum requirements. Because each lender funds the loan, they can add their own overlays. For example, one lender may require contact information for your employer. They may not verify your income, but will make sure you are employed. Another lender may verify your credit score just to make sure you are a good risk. Ask each lender what they require for the program so you are prepared. This way you can provide the required documents at one time. This decreases the back and forth you must do with the loan officer and gets you to the closing quicker.
Making Your Payments on Time
One of the requirements of the VA Interest Rate Reduction Refinance Loan is timely payments. You should have on time payments for the last 12 months. The VA allows 1 late payment in that time as long as it is no more than 30 days late. This is the quickest way to close your loan.
What if you have delinquent payments? Are you automatically ineligible? The answer depends on the lender and your reason for delinquency. This can delay the process, no matter which lender you use. First, you will need to make sure you are back on track with your payments. You must show a lender you resolved the issue and can make your payments on time again. Next, you must provide a written explanation for the delinquency. Any proof you can provide helps move matters along. For example, if you fell ill and were in the hospital, prove it with your medical bills. Your employer can also verify your absence and its reason to help matters. Any issues will slow the process down, though. It is best if you wait until you have 12 months of timely payments.
Make Your Net Tangible Benefit Obvious
One major requirement of the VA IRRRL is the need for a net tangible benefit. Usually, this means a lower payment. Sometimes, though, there are other benefits, such as:
- You refinance from an ARM to a fixed rate loan. Fixed rates are less risky than ARMs. The VA considers this a benefit.
- You shorten your loan’s term. This also provides a lower risk since you decrease the time you borrow the money.
The more the lender needs to think about your benefit, the longer the loan takes. For example, your payment may increase because you will refinance into a fixed rate from an ARM. If you are still in the introductory period of the ARM, your rate may increase. If the payment is more than 20% higher, you will need to prove you can afford the payment. This can slow the process down.
If, on the other hand, your net tangible benefit is obvious and does not require further evaluation, you can close quickly. Of course, if you have an ARM or want a shorter term, you can use the program. It is a great way to do it with flexible debt ratio guidelines. The process just may take longer.
You can close on the VA IRRRL pretty quickly if everything is fairly straightforward. Do not worry if it is not, though. Lenders with experience with the VA IRRRL program can make the process go smoothly. Just make sure you provide the necessary documents right away. If you know your payment will increase, get your income documents ready. Some lenders verify your income no matter how much the payment increases. Others abide by the VA rules and only verify your income if your payment increases more than 20%. The more prepared you are for the process, the quicker it will go for you.