VA Refinance Loans: What is a VA IRRRL Loan?
The VA's Interest Rate Reduction Refinance Loan (IRRRL) helps homeowners refinance their existing VA loans. Here’s what you need to know about VA IRRRL refinance loans.
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What is a VA IRRRL Loan?
The U.S. Department of Veterans Affairs’ Interest Rate Reduction Refinance Loan (IRRRL) helps homeowners refinance their existing VA loans to a lower interest rate loan or to a fixed-rate loan (from an adjustable-rate loan). The goal of the program is to help lower homeowners’ monthly payments or make payments more predictable by fixing the interest rate. Here’s what you need to know about VA IRRRL refinance loans.
Details About VA IRRRL Loans
You can only use a VA IRRRL to refinance a property that you’ve already taken out a VA loan on; the loan will reuse the entitlement that you already have. Unless you are financing an ARM to a fixed-rate loan, the interest rate on the refinance loan must be lower than your current interest rate.
To get the loan, the VA does not require that you get an appraisal or credit check, but the lender who gives you the loan might want these. You don’t need to bring or reapply for your Certificate of Eligibility; the lender can determine your eligibility via an email from the VA. You cannot use the refinance money to pay down a second mortgage or loan other than the existing VA loan, and you will need to prove that you previously lived in the home to qualify.
You cannot do a cash-out refinance with the IRRRL, but you can take up to $6,000 for improvements that make your home more energy efficient. Plus, you can wrap your upfront costs into the total loan amount so you don’t have to pay money out of pocket when getting the refinance.
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Cost of VA IRRRL Loans
Though the VA only requires borrowers to pay a funding fee of one-half of 1 percent of the loan amount (this can be paid upfront or wrapped into the loan amount), some lenders will charge additional fees. Because these fees vary, it’s important to shop around for lenders. Note that fees do not have to be paid by veterans receiving money from the VA for a service-related disability (individuals that would be receiving this money if it weren’t for retirement or active duty pay and surviving spouses of veterans who died in service or from a service-related disability).
Need help with your VA IRRRL? Find a VA lender on Zillow
VA IRRRL Lenders
To contact a VA-Approved lender, use Zillw to find a local VA lender who can help. You may want to contact multiple lenders since loan terms can vary from lender to lender. Note that no lender is required to give you a VA IRRRL. Some lenders will offer borrowers the ability to refinance to a 15-year term vs. 30-year term. It’s important to note that this may significantly raise your monthly payments.
Looking for a VA IRRRL loan? Find a VA lender on Zillow who can help.
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