The information in this article will help you get a general idea of what a VA Loan is, and what a VA Streamline Refinance Program is also known as IRRRL. For more information on VA Loans and IRRRL Programs please visit our blog page here.
A VA Home Loan is a loan program that was designed specifically for Military Active Duty, Veterans, Reservists, National Guard and their families to help them to buy a home. They are issued by approved VA lenders and are guaranteed by the Federal Government.
The VA Streamline Refinance is one of the most common loans backed by the VA. It is also known as an Interest Rate Reduction Refinance Loan or IRRRL. The IRRRL program is designed to help those who already have a loan (conventional or VA backed home loan) and want to refinance and reduce their interest rate. Hence, Interest Rate Reduction Refinance Loan.
How the VA Loan Works
A VA loan is designed for Military Active Duty, Veterans, Reservists, National Guard and their families who have qualifying credit and income to help them purchase a home with zero money down. The VA loan is quite popular since it offers flexible requirements, no private mortgage insurance also known as a PMI, and competitive interest rates.
In order for you or a veteran to qualify for a VA Home Loan, you or the veteran must have served a minimum of 181 days during “peacetime”, 90 days during “war time”, or 6 years in the Reserves or National Guard. If you are a spouse of a service member who was KIA or in the line of duty, you may also qualify for a VA home loan. Almost all active duty and/or honorably discharged service members are eligible for a VA home Loan, or the IRRRL Program.
What is the VA Streamline Refinance Loan (IRRRL)
The Interest Rate Reduction Loan is designed to help you refinance your current mortgage interest rate to a lower interest rate. Since the Streamline Loan is so easy to use, this makes a popular choice to Veterans. Once you have been initially approved for your VA loan, it is easy to lower your interest rate and save a considerable about of money. In some cases you can complete the loan within one month.
The closing costs from the VA Refinance Loan can be rolled into the cost of the loan allowing veterans to refinance with no money down and no out-of-pocket expenses. To qualify for a VA Streamline, you must first meet the requirements, those requirements are listed below.
VA Streamline Refinance Loan Requirements:
- Must be current on your current mortgage with no more than (one) 30-day late payment within the past year.
- The new monthly payment for the IRRRL must also be lower than your previous monthly payment.
- You cannot receive cash from the IRRRL.
- You must show proof that you occupied the property.
- You must have used your VA Loan eligibility on the property you intended to refinance. (See the VA Cash-Out Refinance Loan, for refinancing a property that was bought using a conventional home loan.)
The VA Cash-Out Refinance Loan
The VA Cash-Out Refinance Loan is a secondary VA refinance program that allows a borrower to refinance their conventional (or VA) home loan into a lower rate while also taking cash from the home’s value. The VA Cash-Out Refinance Loan replaces the existing mortgage instead of acting like a home equity loan, which it is often times confused for. A borrower can refinance up to 100% of their home’s value.
Veterans will often times choose the VA Cash-Out Refinance Loan because it offers an extended period to pay off the loan, and it usually gives you a lower interest rate. There is no set amount of time that you must have owned your home for before applying, however you must have sufficient equity to qualify.