Refinancing your home mortgage is a major step for any homeowner to take, and it can provide you with substantial rewards. Generally, refinancing your existing home loan may lower your interest rate, helping you to pay your loan balance off more quickly and easily. You may be able to adjust your loan term for faster debt reduction, enjoy more affordable mortgage payments and more. While there are many potential benefits for you to enjoy by refinancing, you must find the right refinance loan program to meet your needs. Each loan program has different terms as well as different potential benefits for the homeowner to enjoy. The Interest Rate Reduction Refinance Loan program available through the Veteran’s Administration may be one option to consider.
Who is Eligible?
Eligibility requirements for the IRRRL program are fairly straightforward. First, you must be a qualified veteran or military professional who qualifies for VA entitlement benefits. Second, you must have an existing VA loan on your home. This program is not suitable for refinancing a non-VA home loan. You should be aware that there is no credit check requirement for this loan program. This means that it may be an ideal option for you to consider if you need to refinance your mortgage and you have lower credit scores.
What Can You Expect From the IRRRL?
The IRRRL program is typically used by existing VA loan participants who wish to lower their interest rates. It provides you with an exceptional way take advantage of a lower interest rate without the need for an appraisal or a credit check. The underwriting process is easy, and your previous entitlement benefits that were used with your current VA loan will be converted to this loan. This program does not allow you to get cash back from the loan process. Therefore, if you intend to obtain equity through a cash-out refinance loan, you will need to look for a different loan program to apply for. In addition, you must have previously lived in the home, but you do not need to currently live in the home to qualify.
What Are the Closing Costs?
The IRRRL VA program is touted as a home loan option for veterans and military professionals that does not have closing costs. However, this is not entirely accurate. You will not pay out of pocket closing costs in most cases, but there are closing costs. They are simply rolled into the loan. You will not have to pay for a credit report or an appraisal because these are not a part of the loan process. However, your lender or broker may have fees, and you may opt to pay discount points to buy down the interest rate. In addition, there is a VA funding fee that you will be responsible for. The lender’s fee or broker’s fee, the VA funding fee and up to two discount points may be rolled into your new loan amount. Therefore, you may not have to pay any money out of pocket to close your loan. However, some people who wish to pay off their loan as soon as possible may opt to pay these fees at closing.
How Can You Apply?
Any bank or mortgage company can offer the VA’s IRRRL program to you. The financial institution does not have to formally apply to complete this loan program or be a part of an approved network. This means that many lenders may offer this program to you, and their broker or lender fees can vary substantially. Because of this, the VA encourages applicants to shop around in an effort to save money on lender or broker fees. Rates and terms should be similar from broker to broker or lender to lender, so focus on the closing costs when making a comparison. You can then complete the loan application with your preferred lender to begin the loan process.
As you can see, the IRRRL program available through the VA is an excellent financial option to consider if you have an existing VA loan on your home. Carefully review these loan details, and request a few quotes from different lenders to determine if this is a suitable loan program for your needs.