If you are on active duty, a veteran, a reservist or member of the national guard, then you may know that one of the most popular benefits of a VA loan is that it allows you to finance 100 percent of the price of the home you are purchasing. What you may not know is the depth of the additional benefits this loan provides even after you’ve closed.
A little-known benefit of having a VA loan is that it is one of the simplest loans to refinance, offering homeowners minimal paperwork and less costs. The VA offers a streamlined refinance option known as an IRRRL or Interest Rate Reduction Refinance Loan. The IRRRL is used primarily for VA eligible borrowers who may want to refinance to take advantage of lower interest rates or refinance from an adjustable rate mortgage to a fixed rate mortgage.
The benefits of an IRRRL include:
- No new appraisal required by the VA
- No credit underwriting package required by the VA
- No certificate of eligibility is required
- VA funding fee and closing costs can be financed, reducing out of pocket costs
Key requirements of an IRRRL include:
- You can only use an IRRRL to refinance your existing VA home loan
- You must certify that you currently live in or previously lived in the home covered by the VA loan
- Your mortgage payments must be current, with no late payments in the last 12 months
The main purpose of a VA IRRRL is to provide the homeowner with lower monthly payments or the ability to switch from an adjustable rate mortgage to a fixed rate mortgage; therefore, cash out refinances are not allowed. There is one exception, which allows up to $6,000 cash back to the homeowner for energy saving improvements completed within 90 days of closing. Exercising this option may trigger an energy audit requirement so be sure to contact your mortgage banker before initiating the home improvement.
No two refinance situations are alike, so contact an Ameris Bank mortgage banker to determine if a VA IRRRL will be beneficial to you. Click here to get started today.
By: Marlene Sheard
Marlene is the mortgage marketing representative for Ameris Bank and previous sales and marketing president for her local Home Builders Association. She enjoys sharing her experiences for the buying, selling, and financing of homes.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.