What is a VA IRRRL?

 A VA Interest Rate Reduction Refinance Loan (IRRRL), also known as a VA Streamline Refinance, is a mortgage refinance program offered by the U.S. Department of Veterans Affairs (VA) for eligible veterans, active-duty service members, and certain reservists and National Guard members. The primary goal of the VA IRRRL is to help borrowers reduce their interest rates and monthly mortgage payments with minimal paperwork and hassle. Here are some key features of the VA IRRRL:

1. Simplified Process: The VA IRRRL requires less documentation and underwriting compared to other types of refinance loans. Often, an appraisal or credit underwriting package is not required.

2. Lower Interest Rate: The new loan must have a lower interest rate than the existing VA loan unless you are refinancing an adjustable-rate mortgage (ARM) into a fixed-rate mortgage.

3. No Cash Out: The VA IRRRL does not allow the borrower to take cash out of the equity built in the home. It is strictly for the purpose of lowering interest rates and monthly payments.

4. Closing Costs: Closing costs can be rolled into the new loan, so borrowers may not need to pay these costs out of pocket.

5. Occupancy Requirements: The borrower must certify that they previously occupied the property as their primary residence. However, they do not need to currently occupy the home to be eligible for a VA IRRRL.

6. Funding Fee: The VA IRRRL requires a funding fee, which is a percentage of the loan amount. This fee can also be rolled into the loan amount. Certain veterans, such as those receiving VA disability compensation, may be exempt from the funding fee.

7. No Maximum Loan Amount: There is no maximum loan amount for a VA IRRRL, but the new loan amount cannot exceed the sum of the existing loan balance, allowable fees and charges, and up to two discount points.