A VA IRRRL is also referred to as a VA Streamline, and the terms are often used interchangeably. Lenders use the term “streamline” to imply that the IRRRL process is simpler and faster than other types of refinancing options. A VA Interest Rate Reduction Refinance Loan (IRRRL) may help you refinance to a lower interest rate. Most VA IRRRL refinances are done with little documentation and in 20 days or less.
VA Streamline Refinance - THE PROCESS:
The word “streamline” is lender-speak for a simplified and less expensive refinance process. With a streamlined process, there’s often no new appraisal and underwriting is often simplified. And, as long as you’re up to date on your mortgage payments, you should be approved for a streamline loan. The streamlined process moves quickly, and the closing costs can typically be rolled into the new loan.
VA IRRRL Advantages
Lower Interest Rate:
The most common reason why veterans and their family members refinance their VA loans is that they’d like to secure a lower interest rate and monthly payment. The VA strongly prefers that borrowers seeking a VA IRRRL secure a lower interest rate than their original mortgage loan has, unless the loan they are refinancing is an ARM.
Lower Monthly Payments:
When it comes to how refinancing works with a VA Streamline, your monthly payments often decrease. Lower monthly payments may result from an extended term on the loan, which allows more time to pay on your mortgage. A lower interest rate could also result in a lower monthly payment if the length of the loan is held equal.
Lower Funding Fee:
The VA loan program requires borrowers to pay an upfront funding fee that can either be paid at closing, offset with a lender-paid credit, or rolled into the loan balance.
For a VA Streamline, the funding fee is 0.5% of the loan amount. Some veterans are exempt from the fee.