What is a VA Streamline Refinance?

Cardinal Financial June 15, 2021 | 5 min read
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What is a VA Streamline Refinance and how do I qualify?

A refi sounds like a great idea. You’ve been thinking of saving on your monthly mortgage payments. And what better time to do it? Mortgage interest rates have remained competitive for months. You’re all-in.

But then, the memories of getting your first home loan start to creep in. Like the paperwork. And the home appraisal. And ALL the waiting. So… much… waiting.

There’s actually a simpler way to do it. And you’ve earned it. A VA IRRRL Streamline Refinance is reserved for veterans (and other qualifying applicants) like you.

Insider tip: if you hear it called a VA Streamline Refinance, don’t worry. Different name. Same exact thing.

What is a VA Streamline Refinance?

What is VA IRRRL? Glad you asked.

The U.S. Department of Veterans Affairs (VA) offers Interest Rate Reduction Refinance Loans (IRRRL). This home loan refi transfers an existing VA loan to a new VA loan, with a few added benefits.

The program allows people with existing VA loans to:

  • lower their interest rate
  • lower their monthly payment
  • move their loan from an adjustable-rate mortgage to a fixed-rate mortgage

You might even be able to do all three. The coolest part? A VA IRRRL simplifies the refi application process. A Streamlined Refinance often requires less paperwork and usually takes less time to process.

Plus, you might be able to avoid an appraisal altogether.

In a nutshell, a VA Streamline Refinance helps you save money on your VA home loan without all that time and effort.

Terms You Should Know

  • Adjustable-rate mortgage (ARM) – A mortgage loan with an interest rate that may go up and down over the life of the loan.
  • Fixed-rate mortgage – A mortgage loan with an interest rate that stays the same for the life of the loan.
  • VA Interest Rate Reduction Refinance Loan (VA IRRRL) – An easier mortgage loan refi option for current VA mortgages that lowers the existing interest rate. It can also convert the mortgage loan from an ARM to a Fixed Rate mortgage. Also referred to as a VA Streamline Refinance.

Do I qualify for an IRRRL?

Ok. You’re ready to lock in a lower mortgage rate with a VA IRRRL. But can you get one? You might qualify for this type of refi if:

  • You have an existing VA home loan
  • Your new interest rate will be lower than your existing one, OR you currently have an adjustable-rate mortgage
  • You live in (or previously lived in) the home with the loan

Have questions about whether you qualify? No problem. Just reach out to a home loan expert. They’ll help you determine if you’re a good candidate. They can even give you a savings estimate.

Pros and cons of a VA Streamline Refinance

You’re probably thinking about what a smart move an IRRRL could be. And you’re right! There are tons of benefits to this type of refi:

  • It’s quicker and easier than a conventional refi. That’s because there’s typically no appraisal, employment verification, or credit reporting required.
  • Since you’re going from one VA home loan to another, interest rates are super competitive.
  • You could save money monthly AND in the long run.
  • You probably won’t have to pay extra just because you don’t have enough equity in your home.*

*Conventional mortgages usually include an extra fee for borrowers with less than 20% of the loan value to invest up-front. This is called Private Mortgage Insurance (PMI). One of the great things about VA home loans is that they don’t charge you for PMI. So, if you get a VA Streamline Refinance, you won’t have to worry about this extra expense.

Yup, VA IRRRLs kick refi you-know-what (in the best way). But, they do have just a few potential downsides:

  • You can’t use a VA Streamline Refinance to cash-out. It’s only used to reduce payments and/or the interest rate.
  • Most people have to pay a 0.5% funding fee.

A few more things about the VA funding fee

Yes, a funding fee can be a pesky part of any home loan refinance. But, these things can make the 0.5% pill a little easier to swallow:

  • You can roll the 0.5% into the loan amount, meaning you pay the fee in small increments monthly. Just remember, you’ll pay interest on the fee if you do it that way.
  • The Department of Veterans Affairs gets all proceeds from this fee. So, your refi helps support VA home loan programs for future borrowers.
  • Some refi-seekers don’t need to pay the funding fee. To see if you can get a fee exemption, contact your mortgage professional.

So, you could save money with way less hassle? Yup. The VA IRRRL could make that happen for you, and Cardinal Financial is standing by to help. If current VA interest rates are lower than the one you have, this could be your best move yet. Well, second to buying your home, of course.

Reach out to our friendly team today for a savings estimate.

In a nutshell, a VA Streamline Refinance helps you save money on your VA home loan without all that time and effort.

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