VA Streamline Refinances are officially coined "Interest Rate Reduction Refinance Loans" or IRRRLs. These VA mortgages are reserved for veterans that are refinancing an existing VA mortgage. As the name suggests, IRRRLs are designed for interest rate or loan term reductions, so Cash Out Refinances are not permitted under the streamline program.
VA Streamline Benefits
VA Streamline Refinances are classified as either (1) Non-credit qualifying or (2) Credit qualifying. Non-credit qualifying IRRLs offer a more streamlined process, and we've outlined the benefits below.
No appraisal
The majority of VA IRRLs do not require a full appraisal. In some instances, lenders require home valuation through and Asset Valuation Model (AVM). AVM tools are cheaper, completely digital and do not require an appraiser to visit your home.
Lower funding fee
VA-backed IRRRLs have a funding fee of 0.5%. This is much lower than the 1.5 - 3.3% funding fee assessed on standard VA-backed refinance loans.
No credit check
Non-credit qualifying IRRRLs typically don't require a credit check. Alternatively, a mortgage tradeline report may be requested, which only contains history related to your mortgage accounts.
VA Streamline Requirements
VA Streamline Refinances have additional requirements beyond the general requirements for a VA Refinance loan.
VA to VA Refinance Requirement
You must be refinancing an existing VA loan to qualify for the VA Streamline Refinance program. Otherwise, you must seek a traditional VA Refinance or an alternative like FHA or Coventional.
No Cash Back Requirement
IRRLs do not permit you to receive cash at closing. Cash Out Refinances require a separate VA product.
Net Tangible Benefit Requiement
Your monthly principal & interest payment must be lower than your existing VA loan. The VA grants exceptions to this rule if you are reducing your loan term or if you are refinancing from an adjustable-rate VA loan (ARM) to a fixed-rate. Otherwise your new loan must have at least a 0.5% lower interest rate.
Payment History Requirement
Your last six monthly mortgage payments must have been paid on-time to qualify for a VA IRRRL.
Veteran Refinance Closing Costs
CapCenter offers ZERO Closing Cost VA Streamline Refinances. We cover all traditional closing costs for all loans and also cover recordation taxes / fees on refinances. For a VA IRRRL in Virginia, we estimate average savings of around $4,000 when you use CapCenter. Check out our VA Streamline Refinance Calculator to understand how we calculate your savings.
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