Many Veterans are taking advantage of the present low interest rates available to refinance their current VA loan. The Streamline, technically known as the IRRRL (Interest Rate Reduction Refinancing Loan) is a loan designed to take an existing VA loan and allow it to be refinanced to a VA Loan with a lower interest rate. The interest rate on the new loan must be lower than the interest rate on the present loan. The exception to this is where an ARM (Adjustable Rate Mortgage) is being refinanced to a fixed rate mortgage. This is the only scenario where the interest rate is allowed to be higher on the new loan.Qualifying for an IRRRL (Streamline) is relatively simple. The VA does not require an appraisal or minimum credit score for a streamline. The amount of closing costs charged the borrower are regulated by VA guidelines and can be rolled into the new loan. Generally the veteran is eligible if the payments on the present mortgage are current. However, specific lenders have tightened their requirements during the past couple of years so it is wise to check with a lender to see what is required. When the original VA Loan was incurred the buyer was required to live in the home. With a VA Streamline you do not currently have to be living in the home.You do not have to do your IRRRL through the Financial Institution currently holding your VA Mortgage. You can choose any Lender to deal with. Of course you will want a lender who is qualified to do VA Loans and will respond to your emails or calls in a timely manner and takes your refinance as seriously as they would if they were working on their own home loan.As far as Veterans Eligibility goes, the same certificate of eligibility that is on the current VA mortgage is used on the streamline and can be verified online by the Lender handling the loan.This is not a Cash out Refinance and the borrower is not allowed to take cash as a result of the deal. However, there are two possibilities where the borrower can end up with some extra money in addition to the benefit of a lower interest rate. If there is money left in the escrow reserve account for the current mortgage there will be a refund. The amount of the refund could be possibly be around $1,000, more or less depending on the remaining balance at the time of closing. In addition, as a result of refinancing, one or two monthly mortgage payments may be deferred.The length of the Streamline mortgage can be 10-30 years. Veterans who are in a position to refinance from a high interest rate to a lower rate often consider doing a 15 year loan so that the home is paid off sooner. Even with a lower interest rate, the monthly payment generally will go up when changing from a 30 year to a 15 year mortgage. If the borrower can afford the increased monthly payment, a 15 year loan is definitely one to consider because of the long term benefits.Many veterans have taken out a second mortgage on their home and wonder if they can still get a streamline. The answer is yes if the second mortgage holder will sign a subordination agreement.The application process is quick and easy “streamlined” and can be explained by your Lender. Just make sure you are dealing with a Lender and a Loan Officer who is experienced in assisting Veterans with VA Loans, IRRRLs and Refinances.
There are a couple of reasons to consider refinancing. You may need additional cash right now in order to pay for a real need, such as paying college tuition or even remodeling your home, or buying a car (if you pay cash because of a ‘cash out’ refinance loan your mortgage interest is tax deductible…for now) or you may want to take advantage of the much lower interest rates that are available now. The VA has options for both of the above reasons.The first option is a VA Loan for Home Equity Refinancing. This refinance transaction requires repayment of your current mortgage directly from the proceeds of your new VA mortgage. This will be for the same borrower for the same property as on the original loan. A home-owner can refinance up to 90% of the appraised value, plus all closing costs, provided the property can stand up to the designated loan to value ratio. You do not have to own your home for any minimum amount of time, but your home has to have sufficient equity to quality for the loan. Equity is the difference between the market value of your home and the amount you actually owe on it, which includes both your first and second mortgages. You can use the extra money (the equity) to pay off high credit card debt, buy a car, remodel or whatever you need the additional cash for.The second option is a VA Streamline Refinance, sometimes referred to as an Interest Rate Reduction Loan. The sole purpose of this loan is to gain a lower interest rate in order to save money, not only on your monthly mortgage payment, but ultimately over the life of the loan. This program was created by the VA to make this happen with little or no out-of-pocket expenses for the home owner. Either the lender can pay the associated costs in exchange for a slightly higher interest rate or you can roll the closing costs into the new loan. The basics of this program are as follows:
This is only available to veterans who are refinancing their original VA mortgage and who have utilized their original eligibility for their current loan.
No assumptions are allowed
The homeowner cannot receive any cash back from the transaction.
All other liens must be subordinate to the VA’s lien.The VA will not require an appraisal, income or employment verifications, a credit report or a current termite report. The first qualifying criteria is that the current mortgage must have been paid as agreed for the prior 12 months and must not be in arrears at the time of the refinancing.As of July 15, 2010, the VA National Average Interest Rate was 4.617% APR for a 30-year fixed mortgage and 4.704% APR for a 15-year fixed mortgage. If you are currently paying at least half a point more in interest, this may be a viable option that can save you significantly, both on your monthly living expenses and over the life of the VA loan. You can also buy down the loan interest rate by paying points, which could make this an even more lucrative option.To get started, either contact your current lender, or another lender of your choice. This could easily be one of the smartest decisions you will make and the VA has made it so much easier for those eligible persons than what a non-veteran faces with the current economy. What are you waiting for?
Veterans have some significant advantages over other borrowers once it comes to home refinancing. The government, aimed to help former service members, offers quite a few options. Whether you just want lower monthly mortgage payments, or have major expenditure in mind, such as home renovation or a large purchase, VA may offer a low-cost solution. Many veterans also take advantage of VA loans if they need debt consolidation, as it allows for getting out of debt quicker and saving money on rates and loan fees. No matter what your goals are, the following financing options, available through VA only, may help:VA Streamline Refinance LoanBeing the best loan refinance product in the lending market today, VA streamline refinance loan may help you to refinance at an attractive rate and flexible terms, bringing the benefit of reduced monthly payments and lower overall borrowing cost. It is also known as IRRRL and has very relaxed qualification requirements. Credit scores of the borrowers are commonly not considered, making it an extremely attractive choice for bad credit borrowers.VA Debt Consolidation LoanVA debt consolidation loan allows you to borrow as much as 100% of your home equity. It is great for homeowners who have accumulated some equity in their homes and are looking to consolidate all or part of their debts into one loan with lower interest and more affordable payments. Due to attractive interest rates and prolonged durations, it is probably one of the most money-saving debt consolidation products in the market today.VA Refinance ReliefRecent real estate crisis that left many households with decreased home values also caused many to get upside-down on their mortgages. VA refinance relief, a lending product specifically developed to assist troubled homeowners, allows veterans to refinance their non-VA loans that have less attractive terms. Available to qualified veterans and active duty members, VA refinance relief is an attractive solution to those who have no equity due to real estate market crash.VA Home Improvement LoanThe name says it all – this loan is designed for borrowers looking to improve their living conditions. This loan allows you to borrow up to 90% of your home value at a low rate in order to perform value-adding enhancements to your home, such as structural repairs, refurbishments, furnace replacements, and so forth.VA Energy Efficiency MortgageYou may add up to $6,000 with this lending product to the overall borrowed amount should you make energy efficient upgrades to your home or purchase a new energy efficient home. Despite the need to have your house evaluated by an approved third party, it is an attractive incentive to individuals looking to purchase a higher-priced energy-saving home.VA Cash Out Refinance LoanVA cash out refinance loan is one to consider for veterans with excellent credit history who have some equity in their homes. While it is most commonly used for debt consolidation, the loan proceeds may be utilized for any purpose: making large purchases, building cash reserves, and so forth. This is a credit-based loan; therefore, a good credit history is a must-have. In addition, a home appraisal is a must-have in order to qualify. While VA cash out refinance loan offers an attractive rate, a mandatory 3% origination fee may upset some borrowers. It may be, however, included into the amount of your loan.