The Veterans Administration (VA) offers a unique refinance option to people who currently have a VA home loan. This option is called IRRRL or Interest Rate Reduction Refinancing Loan. The Veterans Benefits Administration’s Interest Rate Reduction Refinancing Loan is because of its long term, popularly known as the VA Streamline loan program or simply IRRRL. There are also people who call this program a Streamline option to refinance. This is an important refinancing option that can be used by veterans and other qualified individuals such as the surviving spouses of military servants and veterans. Like other mortgage programs of the VA, they guarantee for the veteran providing him to obtain the loan much easier and buy a house. The desired loan is usually successfully obtained without the need for extensive documentation that other loan programs require.
Benefits of an IRRRL
An IRRRL is often used to lower the interest rates and therefore reduce monthly mortgage payment. New streamline loan is used to pay off or refinance the old one, making the next series of payments at a significantly lower interest rate. Also, that lower interest rate can last for a longer period of time. To simplify, we can say this refinance program is basically a VA to the VA. The Veterans Benefits Administration’s Interest Rate Reduction Refinancing Loan, in a way, by repaying the old loan, guarantees the new loan will be properly returned. Besides this enormous advantage, it offers many other benefits as well, especially if we are to compare the refinance options provided by private companies and other agencies.
When a veteran applies for the IRRRL much of the paperwork is not needed because a VA loan already exists. Documentation such as the certificate of eligibility, the appraisal and full credit file are not required. This will save your time and make the entire process much simpler. However, there is one specific requirement to apply for this refinance loan. You must have made the previous 12 mortgage payments on time. If you have chosen an adjustable mortgage rate for the first loan, you can set the other to a fixed rate. Also, if you have a fixed rate for the first one, the second one will have a much lower interest rate. You will not have to worry about unexpected, sudden costs for an IRRRL. All fees and closing costs will be added to the new loan. Everything will be financed over the duration of the mortgage. Veterans are not allowed to receive cash from the closing of the new loan, but there is a bonus you can obtain with this type of refinance. If you make energy saving improvements to the home up to a cost of $6,000 and include that amount in the new loan, you can obtain this bonus and receive cash from closing of the new loan. Energy saving improvements don’t have to be big or complicated. For example, insulated storm windows or just improved insulation will do the trick.
An Interest Rate Reduction Refinancing Loan can be an effective solution to reduce your monthly mortgage payments on a property acquired through the VA loan programs, and it will greatly help veterans who need to shorten or extend the payment periods on their house.