What is a VA IRRRL? (Your 2019 Guide)
If you want to lower your monthly mortgage payments and you have an existing VA home loan, an Interest Rate Reduction Refinance Loan, or IRRRL, is the way to go.
A refinance loan, when approved, replaces a current loan with different, and typically borrower-friendly, terms.
So what is a VA IRRRL?
A VA IRRRL is a specific refinancing program for people with a VA home loan. If you are eligible and approved, an IRRRL will lower your monthly payment by lowering your interest rate. Or, it will make your monthly payments the same by changing your adjustable or variable interest rate to a fixed interest rate.
The IRRRL is popular for veterans with a VA loan since they already have been approved for their initial loan. An IRRRL is a simple and quick way to lower their monthly payments.
‘Warning Order’ Issued Against Aggressive and Potentially Misleading Advertising and Sales Tactics
The Consumer Financial Protection Bureau and the Department of Veterans Affairs have a standing “Warning Order” for consumers entertaining refinancing offers that sound too good to be true.
These refinancing offers appear official and may promise any of the following:
- Extremely low interest rates
- Thousands of dollars in cash back
- Skipped mortgage payments
- No out-of-pocket costs
- No waiting period
The Department of Veterans Affairs advises borrowers take a closer look at the environment in which the lender operates when analyzing these unsolicited offers.
Misleading advertising and pushy sales tactics are how these lenders get responses. They mention really low interest rates, but end up offering something with very limited benefits that actually add thousands of dollars into your loan balance.
Now more than ever, it is important to understand advertised benefits that actually increase the overall principal balance on your loan. This is just one red flag to look out for when receiving these unsolicited offers.
The Department of Veterans Affairs is working with government agencies to identify, stop, and prevent illegal and misleading advertising related to VA refinancing.
Secure Choice Lending values hard work, integrity and trust. We pride ourselves on transparency and customer service, and will always be committed to helping you secure your dream home without using nefarious tactics.
Call us today at (951) 707-9364. We’d love to help you find the right refinancing option.
What is a VA IRRRL?
IRRRL, or Interest Rate Reduction Refinance Loan, is a loan option specifically for refinancing an existing VA loan.
The goal of refinancing is to lower your monthly payments, or change from an adjustable or variable interest rate to a fixed one. In short, refinancing saves you money.
If you are making payments to a VA home loan, an IRRRL can help lower your monthly payments. Also, if you have an adjustable interest rate, you can convert to a fixed interest rate with an IRRRL.
Because you already have been vetted for your existing VA loan, an IRRRL approval is likely to be quick and come with fewer requirements.
Here are some facts about a VA IRRRL:
- Refinancing from an adjustable-rate to a fixed-rate loan may result in an higher interest rate.
- Applying for an IRRRL does not require appraisals or credit underwriting.
- You may not receive any cash from a VA IRRRL loan proceeds.
- A VA IRRRL may be processed with no out-of-pocket costs. This is done by including all of the costs in the new loan, or by making the new interest rate high enough to enable the lender to pay for the costs
Call Secure Choice Lending at (951) 707-9364 to hear your options for a VA IRRRL.
We will gladly answer any questions you have on the topic.
Secure Choice Lending is an accredited member of the Veterans Advocacy and Benefits Association, Secure Choice Lending is eternally grateful for the sacrifices our veterans and active military personnel have made to protect our freedom.
Is an IRRRL a good idea?
Refinancing with an IRRRL is worthwhile when the difference in monthly payments is enough to provide tangible cost savings.
In other words, a VA IRRRL should keep more money in your pocket each month.
Another reason to pursue an IRRRL is to stabilize your monthly payments, which can be achieved by converting an adjustable interest rate to a fixed interest rate.
What are the requirements for a VA IRRRL?
The IRRRL option is only meant to refinance a property on which you already have a VA loan.
An IRRRL must be a VA-to-VA refinance because it takes into account the eligibility requirements you met in acquiring your VA home loan.
Other facts about VA IRRRL eligibility:
- A Certificate of Eligibility (COE) is not required. But if you have your COE, take it to the lender to show the prior use of your entitlement.
- You will need to certify that you currently live in the property, or have previously occupied the home.
- The proceeds of an IRRRL may only be used to pay for an existing VA loan. If you have a second mortgage, the holder will need to agree to subordinate that lien. The new loan will then be the first mortgage.
- To qualify for an IRRRL, you must be in good standing with your existing VA loan, meaning you have to be current with payments and have been no more than 30 days late within the past 12 months.
- Your existing VA loan must be a loan on the property you intend to refinance.
A loan limit is the amount an eligible veteran can borrow for a down payment.
Because the value of a house depends, in part, on its location, loan limits vary for each county.
While the VA does not set a limit on how much veterans can borrow to finance or refinance a home, there are limits on the amount of liability the VA can assume. This may affect the amount of money a lender will afford a veteran.
According to the VA, the basic entitlement available for each qualified veteran is $36,000.
Generally, lenders will allow up to four times a veteran’s available entitlement without a down payment. However, the veteran must be income and credit qualified and agree to an appraisal on the property, which must appraise for the asking price.
What is a VA Funding Fee?
For every VA purchase and refinance loan, the government applies a VA Funding Fee.
This fee goes directly to the Department of Veterans Affairs and helps cover losses the VA incurs. The money also keeps the loan guaranty program running for future generations of veterans searching for a home.
The fee is calculated based on several factors, including, but not limited to, the type of loan, whether there’s a down payment, and even the nature of the borrower’s service.
Regular military members pay lower funding fees than Reservists and National Guard members. Moreover, those with service-connected disabilities might not have to pay the funding fee at all.
Secure Choice Lending can assist you with a VA IRRRL
We know the VA IRRRL process can be confusing, so we are happy to explain every step clearly and concisely.
Unsure of your eligibility for a VA IRRRL? Call us and we can help.
If you are eligible, we will gladly explain the application process.
Our loan officers promise to help you navigate these waters.
Secure Choice Lending is a full-service mortgage broker that will secure you a mortgage that doesn’t break the bank.
To streamline the lending experience, our team of financial experts matches consumer needs with the appropriate loan programs and level of risk. With loan officers versed in all mortgage types, solutions to your home-buying questions are a phone call away.
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