With the housing situation in turmoil and because of the general economic malaise, the Fed has been keeping interest rates low. These hover around 4% these days. So, many veterans are seeking to refinance their VA loans at the lower rates. In response, the Veterans Administration has made available the Interest Rate Reduction Financing Loan (IRRRL), also known as the Streamline.
Qualifying for the VA Streamline Loan (IRRRL)
The loan is called the VA Streamline because it is relatively easy to qualify and process. For one thing, the VA does not demand to see a minimum credit rating. That is good news if your credit rating has taken a bump or two lately. And the VA does not require another appraisal. When the original VA loan was secured, the home had to be the primary residence of the veteran. Not so with this refinance loan.
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The veteran must be current on payments. The loan granted must have an interest rate lower than the original. The interest can be higher if the veteran is seeking to get out from under an adjustable rate mortgage (ARM) and converting it to a fixed rate loan. Some lenders have cinched up their requirements lately, so check with lenders to understand any overlaying requirements they have. Closing costs levied are constrained by VA guidelines and are included as part of the Streamline loan.
Choose a Lender for the VA Streamline Loan
That is right. The lender of the original VA loan does not have to be the lender you choose for the Streamline. Of course, that lender should be qualified to cast a VA loan. And find a good lender who will treat you and the loan as if they were getting the loan themselves. A lender who will respond to your emails and telephone calls in a prompt manner would be best. Another nice thing about the Streamline is that the same certificate of eligibility you used on the old loan can be used on the Streamline. The certificate can be verified online..
No Cash-Back Option
Though you could end up walking away from the refinancing with a little extra cash in your pocket, the Streamline does not allow the the borrower to take cash as a part of the transaction. Some money may be left in the escrow reserve account for the old mortgage. If so, a refund will be due. In some instances, depending on what is left remaining from the balance, this could be up to $1,000. Plus, as the loan is processed, one or two monthly mortgage payments may be put off.
Payoff Streamline Loans Early
Maybe your financial situation has changed considerably since your first VA loan. If you want to get out from under your mortgage more quickly, Streamline loans can have a maturity ranging from 10-30 years. You may want to consider a 15-year loan to lessen your obligation. Though the payment size will certainly increase, if you can handle them, a 15-year loan is definitely a consideration because of the long-term benefits.
No Real Hitches for a Streamline Loan (IRRRL)
Have you taken a second mortgage on your home? The holder of the second loan will have to agree to sign what is called a subordination agreement. They are usually amenable to this because they realize any financial benefit to you, such as the new lower interest rates, will only increase the likelihood that you will be able to pay their loan.
Streamline Is Streamlined
As you can see, the Streamline is really streamlined. It is quick; it is easy. To ensure that the process stays streamlined, be sure your lender and your loan specialist are savvy and understanding as they help you with your old VA loan, the new IRRRL, and that they understand all the aspects of refinancing. Thank you for you for your patriotic service.
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