Good morning, Treasure Valley! As rates have continued to improve heading into 2024, I am hearing more and more conversations regarding IRRRLS (Interest Rate Reduction Refinance Loan). As this loan product continues to increase in popularity due to falling rates, I asked myself this question; “How many Veterans are not aware of the benefits that come along with an IRRRL, or do not know what an IRRRL is at all?”. Prior to my entry into the career field of mortgages, I had no idea what an IRRRL was or how to utilize it. So, I figured I would break down the benefits of an IRRRL, the eligibility requirements, and the steps you need to take as a consumer to utilize this loan product.
IRRRLS: What Are They?
A VA IRRRL, or Interest Rate Reduction Refinance Loan, is a streamlined refinancing option for U.S. military veterans with existing VA loans. This program allows veterans to lower their interest rates and monthly mortgage payments with minimal paperwork and underwriting requirements. One of its key features is the ability to refinance without a new appraisal or income documentation, simplifying the process and making it more accessible for qualified veterans. The VA IRRRL aims to provide financial relief and increased affordability for veterans looking to optimize their home loan terms.
How Does It Save Me Money?
There are quite a few different ways the VA IRRRL can save you money, detailed below!
- Lower Interest Rates: VA IRRRL allows you to refinance your existing VA loan to secure a lower interest rate.
- Reduced Monthly Payments: With a lower interest rate, your monthly mortgage payments decrease, providing immediate financial relief.
- Streamlined Process: The IRRRL program simplifies the refinancing process, requiring minimal paperwork and no new appraisal, saving time and effort.
- Cost Savings: The streamlined nature of the program, with fewer fees and no need for a new appraisal, translates to lower overall costs associated with refinancing. You also can wrap all the costs associated with the refinance into your principal loan amount, meaning you can complete a VA IRRRL transaction without spending a single dime out of pocket.
Am I Eligible?
To be eligible for a VA IRRRL (Interest Rate Reduction Refinance Loan), certain criteria must be met. Firstly, applicants should possess an existing VA loan that they intend to refinance through the IRRRL program, and the associated property should be or have been their primary residence. Your mortgage cannot be delinquent, and you must be current on all payments. Additionally, there should be a clear financial benefit, such as a reduction in monthly payments or a shift from an adjustable-rate to a fixed-rate mortgage. Notably, the IRRRL is designed exclusively for rate and term refinancing and does not facilitate cash-out refinancing. While a new Certificate of Eligibility (COE) is generally not required, applicants need to have utilized their VA eligibility for the loan being refinanced. It’s essential to be aware of a potential loan funding fee, although it is typically lower than that of a regular VA loan, and veterans receiving VA disability compensation may be exempt. Lastly, a period of 210 must have passed from your first initial monthly payment before you can complete an IRRRL.
There are other eligibility factors that apply so I always suggest reaching out to your licensed and qualified mortgage professional to establish eligibility. If you have any further questions regarding the VA IRRRL, please reach out to us at Creekside Mortgage so we can assist you!