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- What Are Netting Escrows & How Does It Work?: The Best Guide - January 2, 2024
- The Secret About Prescriptive Easement: Top Guide 1 Must Know - December 4, 2023
- About Home Equity Loans In Texas And How Can One Obtain It - November 27, 2023
About IRRRL - Interest Rate Reduction Refinance Loan
If you have an existing VA-backed loan and you want to refinance to reduce your monthly mortgage payments and take advantage of new historically low-interest rates.
In this case, a VA IRRRL is going to be a perfect option for you.
In this post, we will understand what is VA IRRRL, and all you need to know about it.
What is a VA IRRRL?
It is also called a VA Interest Rate Reduction Refinance Loan. The VA IRRRL program is probably one of the best loans available out there.
All you are doing is literally reducing your rate. This loan is a great option if you already have a VA loan and looking to refinance your current VA loan.
In VA IRRRL loan there is no appraisal, no income, and no assets requirement.
VA IRRRL is one of the easiest loans to be processed. It is specially designed to help the veterans just by dropping the interest rate on their existing VA loans.
VA IRRRL Requirements
Even though the VA IRRRL program is a fast, easy, and painless process compared to your VA purchase, you would still need some documents to get through the refinance process.
While you are shopping for the best rates make sure you have these documents ready so that when you find the right deal you are ready with documents that would help speed the process.
1 - Mortgage Statements
The new lender would need your latest mortgage statement from your current lender which shows your loan balance, interest rate, your monthly mortgage payments, and escrows.
2 - Homeowners Insurance Declaration Page
Your HOI declaration page can be acquired through your insurance agent.
If you are not able to get the copy, you can get the name of the insurance agent with the contact number and provide that to your loan officer.
Your loan officer will get the declaration page from your agent.
3 - Government Issued Picture ID
The best example of this is either a copy of your passport or your driving license.
Military ID won’t work for the VA interest rate reduction refinance loan program.
4 - Proof of Social Security Number
The lender would need proof of your social security number i.e. a copy of your social security card.
5 - Mortgage Note
A mortgage note is a little difficult to find.
This is the document that would be there along with the other documents or closing disclosures that you received at the time you purchased your home or last refinanced.
The lender would require all the pages from the mortgage note for a VA IRRRL loan.
6 - Utility Bills
Because of the Patriot Act, and some other occupancy requirements on some VA loans, the lender would need a copy of your utility bills like gas, internet, water, or electricity.
Other requirements: To get a VA IRRRL program, you need to have a current VA loan and have to be at least more than 6 months since your purchase or last refinance.
You would also need to provide a copy of your VA certificate of eligibility to your lender to get a VA IRRRL loan.
When Does It Make Sense to Get a VA IRRRL
VA is instituted with something called a recruitment rule where you have to be able to recoup the cost of the VA IRRRL in 36 months.
When you drop the interest you need to also look at how much are you going to be saving every month versus how much does it cost.
If you are not going to sell the home in less than 36 months and probably going to stay in the home for more than three years, there is no other refinancing program better than the VA interest rate reduction refinance loan for you.
If you are retired and this is going to be your forever home for the rest of your life, it absolutely makes sense to refinance and save a lot of money.
Your loan officer can help you to go through the amortization schedule and let you know how much you can save over the life of the loan.
Fees for Getting a VA IRRRL
There is a funding fee associated with the VA IRRRL of 0.5 percent which is normal.
If you have a 10 percent disability or more, that funding fee could be waived, and also they have instituted the rule about Purple Heart.
So if you have any one of those, make sure that your loan officer knows about it.
When your loan officer pulls the certificate of eligibility it will tell your loan officer whether or not you need the funding fee.
Conclusion
The mortgage industry is on a roll.
This is the time where most homeowners who refinanced or purchased their homes on high-interest rates plan their refinance and get locked in more comfortable interest rates and monthly payments.
VA IRRRL is a good option for veterans especially if qualify for no funding fee, this is the right time to get the VA IRRRL for your home.
