VA IRRRL Benefits
In this article, we will be discussing VA IRRRL benefits. If you are a veteran homeowner that is interested in possibly saving money on your current monthly mortgage payment, I think you will find this article of interest to you. The VA IRRR is a VA loan refiance option sometimes referred to as the VA Streamline, but today we’re going to refer to the Interest Rate Reduction Refinance loan by its more common acronym, the VA IRRRL.
What Are VA IRRRL Benefits
So what are VA IRRRL Benefits? Great question! Below we will take a closer look at the VA IRRRL benefits program.
first and foremost, according to the VA guidelines there is no appraisal required or any sort of home value test for that matter when you are looking into doing a VA IRRRL. The Department of Veterans Affairs simply does not care what your home value is, or what your Loan to Value is. And we’ll explain why that is in just a moment. So first of all, your loan to value ratio, or your LTV, is calculated by basically taking your loan amount and dividing that by your home value.
So, for example, you have a loan and you are wanting to borrow $300,000 dollars. The refinance amount is going to be $300,000 dollars, but your home is currently only worth $250,000 because you have lost equity in your home. That’s a 133% loan-to-value. Some lenders may tell you, “We won’t do it. We won’t do it if your loan-to-value is too high and over 100%. Basically, if you owe more on your home loan than what your house is worth, we’re not going to do it.” Well, listen to this, that’s not the case with us, and that’s not the case with the VA.
The VA does not care about your loan-to-value. Now, why would a lender have a requirement that is more than what the VA requires? That lender has every right to become stricter; they cannot be looser, to ensure that they stay inside the guidelines. Another benefit of the IRRRL is that it’s a very fast and painless loan process. Believe it or not, this is a loan that in most cases, that can be done in as soon as ten to 15 days. There is very little documentation from the veteran that is needed. So, when we talk about less paperwork or less documentation, we’re talking about a much quicker turn around time and faster process. You don’t need W-2’s or pay stubs; and like I mentioned earlier, there are no appraisals needed. Another benefit is the temporary pause on your mortgage payment. This is an unintended benefit if you will; however the VA does not let you do the IRRRL simply to defer mortgage payments. As a matter of fact, they’re pretty strict on even advertising that this is a benefit of the IRRRL.
It’s important that you, as the borrower, understand that this is an unintentional and favorable benefit to you, the Veteran. And it happens on FHA loans and conventional loans as well: it’s just simply how refinances work. So, let’s talk about the fact that when you do defer payments, the new loan amount increases. So, the cost of your loan will go up. Now, if you choose, you don’t have to defer payments, that’s completely up to each individual. Give us a call and we will be happy to explain to you how to do a refinance without a deferment of your payments. However, most people who choose do a VA IRRRL refinance want to be able to defer their payments and keep that little extra in their pocket. This is not a reason to do a VA IRRRL. It just happens to be an unintended benefit. We’ve already talked about the fact that there’s no income or employment verification. Remember where we talked about no paperwork, or less paperwork equals faster speed? You can expect your lender to employment verification but, that’s it!
You don’t have to prove that you have adequate income. We’ve talked about the reduced documentation and paperwork, but I’m going to mention it again: that’s probably one of the biggest reasons why the VA IRRRL is such a great refinance option. Who wants stress? Nobody. All this stuff about your monthly income, your financial details—you already went through all of that when you first purchased your home, or the last time you decided to refinance. Because an IRRRL is simply lowering your payment, generally speaking, your payment or your term is decreasing, and there’s just no need to go through it all over again.
Now, here’s the main benefit of the VA IRRRL: and that is ultimately lower interest rates which in turn means lower payments. That’s why the majority of people call us. They want to drop their rate and save more money each month and right now in the particular economic environment we are looking at rates going down. There are a lot of reasons why interest rates are currently trending down and have the possibility to go even lower, according to some economists. When you drop your rate, your payment normally drops, unless, of course, you’re going to lower your term. So, there’s a lot of benefits to doing the VA IRRRL: the biggest one is lowering that payment.
It’s extremely important to determine what your current loan type is. If you have a VA mortgage on your property today, then we can help you out. You want to have certain info available when you speak to a Mortgage Banker. Most importantly, your current interest rate and term. The reason your interest rate is so important is because it’s one of the first questions a Mortgage Banker is going to ask you when you call. And then, finally, you’re going to have to get some documentation together: driver’s license, social security card, or a copy of a passport. You will also want a copy of your homeowner’s insurance and current mortgage statement, but ultimately, it’s three to four pieces of information which you should have readily available at your home.
Thanks for reading, and if you have a VA loan and would like to lower your rate and possibly your payment, Call 855-956-4040 to speak with a VA loan specialist. Click the following link If you would like to read more about IRRRL program pros and cons. Thanks again for visiiting Home Buying Insiders and have a great day!