Existing VA Home Loans Take Advantage of Lower Rates

Many people are aware that the Veteran’s Administration (VA) offers attractive financing terms for our veterans. However, many veterans do not know that they can take advantage of lower mortgage rates with relative ease.

The VA offers a program called the IRRRL or the Interest Rate Reduction Refinance Loan. Any veteran that currently has a VA mortgage can refinance without meeting the standard refinance guidelines. The credit report used for this process is a mortgage only credit report that shows the mortgage payment history and credit scores. Also, in most cases an appraisal is not required.

The goal of this program is to show a clear benefit for the homeowner after the refinance is complete. In order to prove a benefit the rate must be lower, or the loan term is shortened, or the veteran is converting from an adjustable rate loan to a fixed rate loan.

Other highlights of the IRRL:

  • No requirement to provide proof of income
  • Appraisal may not be required
  • Usually no expense paid at closing – all closing costs are allowed to be rolled into the loan.
  • At the time of the refinance the borrower must be current on their mortgage and show no more than one 30 day late payment on their mortgage within the previous 12 months.
  • Borrower cannot receive cash at closing.
  • This is really a wonderful benefit. For example, on a $225,000 mortgage, a reduction in interest rate by just 2% can mean a payment that is $250 lower!
  • Any veteran that has an existing VA loan should at least talk to their lender to find out how today’s rates compare to their existing rate. It could mean a substantial benefit to them with a very easy approval process.

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