You don’t have to have an Uncle IRRRL but you must be a veteran with a current VA-backed home loan. IRRRL is an acronym for Interest Rate Reduction Refinance Loan. To refinance with this program, also called the VA Streamline, the loan must provide a net tangible benefit (NTB) which would be in the financial interest of the Veteran.
Obtaining a lower interest rate is usually the reason behind refinancing but there needs to be enough difference in the current and the new mortgage to justify the expenses incurred. Significantly lower payments or a shorter term are examples of acceptable benefit.
The Veteran must currently have a VA-backed home loan to refinance using this program. The Veteran does not have to currently live in the home as long as it can be certified that he or she did at one time.
In most cases, an appraisal is not necessary and less verifications are required. A minimum 640 credit score is needed, and borrower must be current on their payments with no 30-day late payments in the previous 12-months. A two-year employment history is required.
There are expenses associated with the IRRRL but they can be rolled into the loan balance. The VA funding fee, required on new VA loans for purchases or refinances is lower on the IRRRL at 0.5%. Disabled Veterans and qualifying surviving spouses refinancing under this program are exempt from the VA funding fee.
This program is not available for a cash-out refinance. There is a $6,000 exception for additional funds to pay energy improvements completed 90-days prior to closing. Your lender can provide more information for you.
If you are a Veteran and considering a refinance, ask your mortgage professional about this program. If you need a recommendation of a trusted mortgage professional who is experienced in VA loans, give me a call at (703) 707-0334 or ghughes.