What is a VA Interest Rate Reduction Refinance Loan (IRRRL)?
A VA-backed Interest Rate Reduction Refinance Loan (IRRRL) is a refinance loan for qualifying Veterans and Service Members who already have a VA-backed home loan and are interested in reducing their monthly mortgage payments or making their payments more stable. Refinancing your VA loan using an Interest Rate Reduction Refinance Loan, or VA IRRRL, replaces your VA loan with a new VA loan with different terms.
Who Is Eligible For A VA IRRRL?
In order to be eligible for an IRRRL, you must fulfill the following criteria:
- You already have a VA-backed loan
- You are using the IRRRL to refinance an existing VA-backed home loan
- You can prove that you currently live in or used to live in the home covered by your current VA loan.
If you have a second mortgage on your home, the holder must first agree to make your new VA loan the first mortgage.
The Benefits of A VA IRRRL
The IRRRL often goes by the nickname “streamline” refinance. There are several benefits to this type of refinancing, including:
- Lowering your monthly mortgage payment by getting you a lower interest rate
- Stabilize your monthly payments by moving from a loan with an adjustable or variable interest rate (an interest rate that changes over time) to one with a fixed interest rate (an interest rate that stays the same over the life of the loan).
With an IRRRL, you can borrow up to the Fannie Mae/Freddie Mac loan limit in most areas. If you can make a down payment, you can borrow over the Fanie Mae/Freddie Mac loan limit.
How Do I Get A VA IRRRL?
The first step to getting an IRRRL is finding a VA-approved lender. Different lenders offer different terms, conditions, requirements, and interest rates, so be sure to shop around before choosing a lender. Lenders can be a private bank, mortgage company, or credit union. An IRRRL is a VA-backed loan, but it is not distributed by the VA.
The second step is to retrieve your Certificate of Eligibility (COE). You may still have your COE from when you initially got a VA loan. If you don’t, a VA-approved lender can retrieve this for you in most cases!
Finally, you will follow all of the steps provided by your lender to get your loan approved for closing. Even though no down payment is necessarily required for VA loans that do not exceed the loan limit, you will need to pay closing costs. You also may need to pay the VA funding fee. The VA funding fee can be included in the new loan and does not necessarily have to be paid upfront.
Contact a VA Loan Specialist
Are you ready to pre-qualify for an IRRRL? Our loan specialists at VeteransLoans.com can determine your VA loan eligibility and get you pre-qualified in a matter of minutes. Call 1 (888) 232-1428 to speak with a loan specialist today.