VA offers an Interest Rate Reduction Refinancing Loan, IRRRL, for veterans with no qualifying on credit or income. (Please note exceptions below) This loan is for the purpose of lowering the veteran's interest rate from one VA guaranteed mortgage loan to another. The new loan must be at a lower interest rate than the existing loan unless the loan being refinanced is a VA Adjustable Rate Mortgage.
Generally, no credit, income or underwriting is required to close the loan automatically. As stated above, there are exceptions that will be covered at the end. The IRRRL must have a lower principal and interest (P&I) than the current loan, unless an ARM is being refinanced, the new loan is a shorter term or energy efficiency improvements are included in the IRRRL.
The closing costs may be financed in an IRRRL but no appraisal is required. If the payment increases by 20% or more due to any of the reasons above, the income and debts must be underwritten. A statement showing how long it will take to recoup all closing costs (both included in the new loan and any paid outside of closing) must be signed by the veteran, acknowledging the effect of refinancing the loan.
NOTE: If the current loan is delinquent, it is still possible to refinance under this program but will require pre-approval from the VA. In the case of a delinquent loan refinance, late payments and late charges, plus reasonable costs if legal action has commenced may be added to the loan. The program is not one that can be done without income verification.
It is possible to do an IRRRL for a veteran and new spouse, the widowed spouse of the veteran, the veteran and a different spouse, the divorced veteran alone but not for the divorced spouse alone or the widowed spouse if she/he was not on the original loan. There could be income requirements on these exceptions.
IRRRLs are available for properties that are not currently occupied by the veteran or spouse of an active service member if he or she previously occupied the property as his or her home.
This is an awesome program that can really have some significant positive impact on a veteran's financial well being.
Fred - do you know in 8 years I haven't done ONE VA loan? That's why I'm bookmarking this post. Thanks !
Rich - Thanks, it is one of the easiest refinances to do and a great help to the vet.
Steve - As a vet, I have had a couple of them myself and did one IRRRL also. I like VA loans, they are a bit more complicated, but a great product for our heros.
Fred - On several levels, I'm a fan of VA loans. While the Government isn't on my list of favorite entities on earth at times, I'm truly glad they offer such a product to those who have served our country. In my view, this is product isn't talked about enough on AR.
Fred, this has been reblogged by Rich on PREP and I also reblogged it on my AR account.
Fred,
Sounds like a great product but a silly acronym. You always seem to know/blog about these new products before anybody else.
Michelle
Jason - I know how you feel about government loans, but VA are really a lot different. Also, you will probably find that the delinquency rate is much lower....no facts, just feeling. I agree there isn't enough talk about this program.
Thanks Danny, I appreciate the exposure for this product. It is really a win-win for vets.
Surprisingly Michelle, this is an old program with an odd acronym. The IRRRL has been around forever, but so much of the time, rates don't cooperate.
Well that just goes to show you how many VA loans I do.
Well, go out and lasso a sailor, isn't PA a big seaport state? :-D
I've done a lot of IRRRL's over the years, but I used to really concentrate on FHA Streamlines. With these low rates its time to go after these again.
I agree with the IRRRLs Tim, but the FHA Streamlines are going to be a lot harder to do the no cost version with the new yield spread premium compression.
Fred,
What an great and timely post. FHA streamline and VA IRRRL are all the talk about the market here lately. If rates d take their dip it will present the best market for these loans we've ever seen. Also we need to be writing these loans to alleviate the monthly payment burden for these borrowers. I'm sure the savings in monthly payments will work their way into spending that can only help the overall economy.
Gerry Suarez, Jr.
Your FHA Loan Pro!
Very right Gerry. Not much of a downside on this if done for the veteran's benefit.
Just saw this article tonight as I was looking for more information on the IRRRL. Don't know if I'm allowed to ask this question on here, but I'll give it a shot. Does the company holding my mortgage have to process the IRRRL or can I look for competing rates? I was just told by my local bank that they could not do it since they don't hold my mortgage. If that's true it limits my options and hurts me as I'm waiting for the holding institution to reply to me and rates are going back up. Really doesn't seem fair and not so "streamlined."
Hi Brian. You are always welcome to ask the question. The answer is that anyone that can do a VA loan can do the IRRRL for you. If you are in Oregon, Washington or California, I would be more than happy to help you. If you are somewhere else, let me know and I will find someone for you. Take care and have a Happy New Year.
Fred:
It sounds good, however our market is so high we don't see many VA here. I did many years ago.
If I do here from a veteran,I will refer them to you.
Richard
Thanks Richard. I can't do the loan in NJ, but I sure have some great associates that can.
Fred,
This is a great product and certainly is in need of more exposure. I think we will see a lot more of these getting done in 2009.
Joe
Joe - With rates where they are an IRRRL is an excellent choice for our veterans.
Looking for some guidance. I have a VA loan with Wells Fargo and we are currently on a repayment plan. Have made five consecutive payments but struggling. Did not know an IRRRL may be done even if you are delinquent but how do we find a lender that would do this process for us. Wells Fargo is telling me the y cannot do it. Our current interest rate is 6%
More than likely you wouldn't get enough help from an IRRRL to make it worthwhile, but if you did, finding a lender is going to be difficult. Without know how far behind you are or where you are, makes it difficult to give you any information.
VA Mortgage Leader a division of Flagship Financial Group is currently able to help thousands of veterans who have not been able to qualify due to the lender requirements that are above and beyond the VA Guidelines. Veterans are able to get the IRRRL according to VA Guidelines which means the following are okay:
This is a great way to assist the many VA Home Loans that have been unable to qualify for the low interest rates of today.