VA Streamline (IRRRL) Refinance
- No appraisal
- More flexible eligibility requirements
- Option to reduce mortgage term without large payment increases
VA IRRRL Refinancing
The Interest Rate Reduction Refinance Loan (IRRRL), sometimes called a “Streamline” loan, is a product for existing VA borrowers interested in taking advantage of lower interest rates. An IRRRL can help a VA borrower reduce their monthly payments by refinancing at a lower interest rate.* One of the best features of these kinds of loans is that they require very little paperwork and can often require almost no out-of-pocket costs. If closing costs are an issue, borrowers have the option of rolling their closing costs into the total loan amount. Additionally, new appraisals are rarely needed, which can further simplify the process.*By refinancing your existing loan, your total finance charges may be higher over the life of the loan.
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What is the Streamline Refinancing Program?
The VA Streamline is designed to let you refinance your current VA loan and save money. Whether you’d like to lower your interest rate, transition from an adjustable-rate loan to a fixed-rate loan, or both, a VA IRRRL Refinance helps many borrowers take advantage of the today’s historically low rates. The loans are designed to be easier to apply for than other types of refinance loans and often the closing times are significantly shorter as well. To qualify, you must show a financial benefit or transition out of an adjustable rate (ARM) loan.
VA borrowers have multiple options to choose from, making VA IRRRL loans a flexible option for different financial needs. Fixed rates options allow you to choose any loan term from 10 to 30 years. This is helpful if you’re already a number of years into your current loan and you don’t wish to extend your payoff date. There is even a government-backed option that allows you to roll your closing costs in the total loan amount.
Why a VA Streamline Loan?
There are several reasons why current VA homeowners may want to take advantage of a VA Streamline Refinance. The most common is that a IRRRL lowers your interest rate by refinancing your existing VA home loan. Simply put, a lower rate means that, in most cases, your monthly mortgage payment should decrease.*
Another common reason is to transition from an adjustable-rate mortgage (ARM) into a fixed-rate mortgage, where your payment will stay roughly the same throughout the life of your loan.
The flexibility of a VA IRRRL loan is another great reason to consider it. Even if you’re several years into your current VA loan, you can choose a term that saves you money without extending the time it will take you to pay it off.*By refinancing your existing loan, your total finance charges may be higher over the life of the loan.
Am I Eligible for a VA IRRRL Refinance?
VA loans are backed by the U.S. Department of Veteran Affairs as a benefit for veterans, service members and their families. The basic qualification requirements include those who served on active duty for more than 90 consecutive days during wartime or more than 181 days of service during peacetime. For National Guard members and Reservists, the veteran must have served at least six years. Some surviving spouses of veterans who died while in service or from a service-connected disability may also be eligible. To be eligible for a VA Streamline Refinance from PennyMac, you must hold an existing VA loan and have made the last three payments on time. There is also a requirement for what is called “net tangible benefit,” which means that the IRRRL must have a lower interest rate than the loan it is refinancing unless the existing loan is an Adjustable Rate Mortgage (ARM).
The process of refinancing my VA home loan went very smoothly and took less than 30 days to complete. Everyone that I dealt with were highly professional.
Frequently Asked VA Streamline Questions
What is the IRRRL Funding Fee?
One unique fee that you may encounter on a VA IRRRL that you don’t see on other loans is the IRRRL Funding Fee. This fee is paid directly to the VA and is meant help cover losses on the few loans that go into default. Most VA IRRRL loans require a 0.5% Funding Fee, although some Veterans are exempt from paying the fee if they are disabled. An example of how this works is, if you’re paying a 0.5% funding fee on a $200,000 mortgage, your total IRRRL Funding Fee will come out to $1,000. You will usually have the option of rolling this fee into your total loan and spreading it out over the life of your loan, if you choose to do so.
Can I Take Out Cash?
Unfortunately, it is not possible to take additional cash out with a VA IRRRL loan. If are in a VA loan and you’d like a Cash-Out Refinance, PennyMac offers a VA Cash-Out option that we’d be happy to discuss with you.