The VA Loan program gives eligible veterans and their families access to refinancing options that either lower monthly mortgage costs or take cash out of a home’s equity.
There are two options available for VA borrowers to refinance their homes: the VA Streamline Refinance, also known as the Interest Rate Reduction Refinance Loan (IRRRL), and the VA Cash-Out Refinance.
Two Refinance Options
The “streamline” refinance, referred to as the Interest Rate Reduction Refinance Loan (IRRRL) option will most likely result in a lower monthly mortgage rate. This option allows borrowers to refinance into a fixed rate or adjustable rate mortgage (ARM) loan. However, if the borrower is refinancing from an existing VA ARM loan to a fixed rate loan, the interest rate may increase.
The benefits include:
- quick processing time since veteran is going from one VA option to another
- no re-appraisal required
- Limited credit check
- no new Certificate of Eligibility required
- no closing cost option available and funding fee is reduced to .05% and may be added to existing loan
- Veteran may not receive any cash back greater then $500.00.
- Veteran must prove they live or have lived in the home. VA will allow non owner occupied properties. Ask a USAVA representative for more information.
- To qualify, homeowner must be current on his or her mortgage with no more than one 30-day late payment within the past year.
- An IRRRL must be used to refinance a property that a Veteran has used their VA loan eligibility. Must be a VA to VA refinance.
- The IRRRL will reuse the entitlement originally used by the Veteran.
- the Cash-Out refinance option is available for all loan types
- closing costs and funding fees may be added to existing loan
- cash may be used as the borrower wishes to pay off any type of debt
- Veterans in Texas do not qualify for the Cash-Out option due to state regulations.
- Veteran must currently live in the home.
