The VA streamline refinance mortgage is a powerful loan program for active military and veterans in the United States. Do you already have a VA loan? If you do, then you know what a great benefit you get with a VA refinance loan. But are you aware that now may be the perfect time for you to refinance your VA loan?
The VA Streamline Refinance is One of the Most Popular Refinance Programs in the Country in 2024 and No Appraisal is Required!
In most cases VA streamline refinance could be a wise choice to refinance if you meet the VA eligibility requirements. If you want to decrease your monthly expenses with a lower VA rate and lower monthly payment, the VA streamline program makes sense.
With the VA IRRRL, you must be able to show the underwriter that the VA streamline refinance will lower your monthly mortgage payment and decrease the amount of interest paid over the loan’s duration.
Below is more information on the VA streamlines so that you can determine if this is the right financial move for you.
What is the Interest Rate Reduction Refinance? (AKA, VA Streamline Refinance Loan)
The VA Interest Rate Reduction Refinance Loan or IRRRL is a refinance program that is for homeowners who have a current lien guaranteed by the VA. It is more commonly known as a VA streamline refinance.
This program makes the home refinance process simpler by waiving the customary documentation requirements such as employment check, bank account and credit score information, and a new appraisal of the home. Over the years, the VA streamline rates have earned a reputation for having very competitive interest rates with low lending fees.
Today’s VA Streamline Refinance Requirements
The Department of Veterans Affairs has offered the VA streamline loan for several decades. The VA streamline program has a reputation for being a powerful tool for veterans and active-duty military borrowers to reduce the cost of their home loan payments monthly. Understanding the VA streamline mortgage refinance requirements is vital for people borrowers that want the best possible loan for their situation.
Eligibility for VA Streamline Refinance: The VA streamline is solely available to borrowers that currently have a VA loan. It was created to simplify the refinance process for those blessed borrowers that already have a VA mortgage. This is not a cash-out refinance.
Prove Prior VA Loan Usage: To qualify for the today’s VA streamline program, you must prove previous use of your VA loan entitlement. This usually involves providing evidence that the home in question carries a VA mortgage.
Net Tangible Benefit: One of the primary VA streamline refinance requirements is demonstrating a “net tangible benefit.” This means that the VA refinance must result in a lower interest rate or a more favorable loan term, providing clear financial benefits for the veteran applicant.
No Home Appraisal or Credit Underwriting: One of the unique features of the VA streamline refinance is the absence of a home appraisal or credit underwriting. Unlike traditional refinancing, this streamlining process simplifies the requirements, focusing exclusively on the borrower’s payment history on their VA mortgage.
Continuous Occupancy: The property being refinanced with a VA streamline loan must have been the borrower’s primary residence. Continuous occupancy is a crucial requirement, ensuring that the program is used for homes that serve as the borrower’s primary dwelling.
Timely Mortgage Payments: The borrower should have a history of on-time mortgage payments. Generally, the VA requires at least six consecutive monthly payments to qualify for a streamline refinance. This demonstrates the borrower’s ability to manage their mortgage responsibly.
Funding Fee Considerations: While the VA streamline offers numerous advantages, it’s essential to be aware of the funding fee. The funding fee is a one-time fee paid to the VA and can vary based on factors such as military service, down payment history, and whether it’s the first or subsequent use of the VA loan entitlement.
VA Loan Limits: VA streamline refinance loans may have certain limits, particularly when it comes to covering closing costs. If the new VA home loan includes prepaid items, VA funding fees, or late charges, the total amount must not exceed the sum of these costs plus two discount points.
More About the VA Streamline Mortgage Refinance
Find Out Why the VA Streamline Refinance Mortgage Has Been One of the Most Revered Military Loan Program for 3 Decades.
VA mortgages are designed specifically for active military and veterans. VA refinance loans may be issued by any lender that is approved by the VA.
They are backed against default by the federal government.
The major benefit of the VA home loan is that if you have sufficient documented income and credit, you can get a home loan with no down payment required.
This makes buying a home with a VA loan much easier for many who have served in the military.
Also, VA loans offer very flexible qualification standards, no mortgage insurance and primary and second home mortgage rates that are even lower than what the FHA offers. (learn more about the FHA-streamline option)
To qualify for the VA mortgage, you need to have served in the military at least 181 days during a time of peace, 90 days during a war period, or six years in the National Guard or Reserves.
You also can get an VA home loan if you are the spouse of a former member of the service who died in the line of duty.
The VA streamline program is a special program that is available for people who have current VA loans. This loan allows you to easily refinance your mortgage to a lower interest rate than what you have now.
Many people who have taken out a first-time home buyer VA loans for several years are choosing to refinance their loans now in 2024 because interest rates have dipped in the second half of the year. Many people with VA loans are able to refinance at a rate well under 4%. This can give many the opportunity to save hundreds of dollars each month in payments.
The streamline refinance loan by VA is very popular because it is so easy to get the paperwork done. You already have been approved by the VA for your loan, so it is very easy to get the refinance done.
Another benefit – your closing costs can be just rolled into the loan itself. So, you may be able to do a VA mortgage refinance without paying anything out of pocket. It also may be possible to have the lender take most of the cost of the loan if you agree to a slightly higher interest rate.
Qualifications for a VA Streamline Refinance Mortgage
To qualify for this excellent program, you need to meet the following standards:
- Be current on your VA home loan; you cannot have more than a single 30-day late payment in the last 12 months.
- The new payment on the refinanced loan has to be lower than the previous mortgage payment. However, there is an exception: If you refinance an ARM into a fixed rate loan, the payment does not need to be lower on the new loan.
- You cannot get any cash back from the refinance; if you want to get cash out, you have to do a traditional VA cash-out refinance with full loan documentation.
- You have to certify that you have been living in the property.
- You have to have previously used your VA loan eligibility on the home you want to refinance.
VA Streamline Refinance FAQ
Here are the top 10 frequently asked questions about VA streamline loans (also known as Interest Rate Reduction Refinance Loans or IRRRL) to guide you:
What is a VA Streamline Refinance (IRRRL)?
A VA Streamline Refinance, also known as an Interest Rate Reduction Refinance Loan (IRRRL), allows borrowers with an existing VA loan to refinance into a lower interest rate or transition from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage. This program requires minimal documentation and no property appraisal, simplifying the refinancing process for eligible homeowners.
How Does an IRRRL Differ from a VA Cash-Out Refinance?
While the VA IRRRL focuses on reducing interest rates and monthly payments, the VA cash-out refinance provides an option to access home equity in cash. Unlike the IRRRL, the cash-out option allows homeowners to take out funds for various financial needs. However, the IRRRL does not offer general cash-back options, except for up to $6,000 allocated for energy-efficient upgrades.
What Are the Eligibility Requirements for a VA IRRRL?
To qualify for a VA IRRRL, borrowers must have an active VA loan in good standing. They are required to demonstrate a net tangible benefit from refinancing, such as a lower monthly payment or switching from an ARM to a fixed-rate loan. Additionally, borrowers must have made timely payments on their current loan.
Is an Appraisal Required for a VA Streamline?
One of the key benefits of the VA IRRRL is that it does not require an appraisal, which speeds up the process and reduces costs compared to other refinancing options.
Do I Need to Provide Income Verification with VA Streamline?
Most lenders do not require income verification for a VA IRRRL. However, individual lenders may have their own policies, and some may ask for additional financial documentation during the process.
How Long Does the VA Streamline Refinance Process Take?
The VA streamline process is generally faster than other refinancing options, typically taking less than 30 days, depending on the lender and the borrower’s financial situation.
Do you need to have another credit check with VA Streamline?
There is not any VA requirement for your credit to be checked again. But your individual lender may opt to check your credit again. They also may want to check your income to ensure that you have the income to make your payments. In most instances, credit requirements on VA loans are very reasonable.
Can I Get a VA Streamline Refinance with a Different Lender?
Yes, borrowers are not obligated to refinance with their original lender. It is recommended to compare rates and terms across multiple lenders to find the most favorable refinance terms.
Is There a VA Funding Fee for VA Streamline?
Yes, the IRRRL program includes a 0.5% VA funding fee, which can either be paid upfront or rolled into the loan balance. This fee applies to most borrowers, though some veterans and service members may be exempt based on their status.
Can I Refinance My VA Loan Multiple Times with VA Streamline?
Yes, borrowers can refinance their VA loan multiple times using the IRRRL, but there must be a 210-day waiting period between refinances. Each refinance must also result in a net tangible financial benefit to the borrower.
Are Closing Costs Required for a VA Streamline?
Yes, closing costs are required, but borrowers can often roll these costs into the loan amount. Typical closing costs include title searches, title insurance, and a loan origination fee.
Do you need your certificate of eligibility to get a VA Streamline?
No. As you used it when you got your original loan, you do not need it again for the refinance.
Does the VA Have Control Over the Interest Rate You Get?
No. The VA does offer a simple, straight forward process for getting a refinance, but VA mortgage rates are set by banks.
Do You Need to Use Your Current Lender for the Refi?
No. It is better actually if you look around at other lenders. You may be able to find a lower rate if you do so.
Can You Do a VA Streamline if You Are Behind on Your Current Loan?
Yes, you can in some cases. The lender will want to understand why you are behind and that the problem has been resolved. You will need to provide a letter that explains the reason for you being behind on your current loan. It is up to the VA to decide if they will allow you to continue with your refinance.
These questions offer a well-rounded understanding of the VA streamline process. For more details, you can explore resources from lenders like Veterans United, and U.S. Department of Veterans Affairs websites for the latest updates and policies on VA loans and refinances. Sources such as VA.gov provide official information and eligibility criteria to guide borrowers through the process.
Bottom Line on the VA Streamline Refinance Program
The VA streamline refinance is a fantastic program that is easy to get done and to qualify for. You should definitely refinance if you have a VA mortgage if your current interest rate higher than what is being advertised.
Understanding and meeting these VA streamline requirements is critical for veterans and military borrowers looking to maximize the benefits of the VA streamline program. This streamline process provides a unique opportunity to secure more better terms without the extensive paperwork and scrutiny often associated with conventional refinancing. By meeting these VA streamline requirements, eligible borrower can streamline their path to financial relief and better mortgage terms.
About RefiGuide
Bryan Dornan is a financial journalist and currently serves as Chief Editor of RefiGuide.org. Bryan has founded several mortgage and marketing companies and has worked as a loan officer and mortgage broker in the industry for over 25 years and has a wealth of experience in providing mortgage clients with the highest level of service in the industry. Bryan's continual focus is to promote affordable home-ownership to consumers like you across the United States. He also writes for RealtyTimes, Patch, Buzzfeed, Medium and other national publications. Find him on Twitter, Muckrack, and Linkedin
More articles by RefiGuide