VA Interest Rate Reduction Refinancing Loan (IRRRL) Facts for Veterans


Hello, this is Bobby Kurpinsky, and today
we’re here to talk about VA IRRRL Facts for veterans. IRRRL stands for interest rate reduction
refinancing loan. You may see it referred to as a “streamline” or a VA to BA. Except
when refinancing existing VA guaranteed adjustable rate mortgage, or an ARM, to a fixed rate,
it must result in a lower interest rate. When refinancing from and existing VA ARM to a
fixed rate, the interest rate may increase. No appraisal or credit underwriting package
is required by VA. You should be aware however, that lenders may require an appraisal and
a credit report anyway. A certificate of eligibility is not required,
and an IRRRL may be done with no money out of pocket by including all cost in the new
loan, or by making the new loan at an interest rate high enough to enable the lender to pay
all the closing costs for you. Veterans are strongly urged to contact several lenders.
There may be big differences in the terms offered by various lenders you contact. Some
lenders may contact you suggesting that they are the only lender with authority to make
IRRRLs. Remember, any lender may make you an IRRRL.
Some lenders may say that VA require certain closing costs to be charged and included in
the loan. Remember, the only cost required by VA is a funding fee, of one half of one
percent, of the loan amount, which may be paid in cash or included in the loan. The
occupancy requirement for an IRRRL is different from other VA loans. When you originally got
your VA loan, you certified that you occupied or intended to occupy the home. For an IRRRL,
you need only certify that you previously occupied it. Some lenders offer IRRRLs as
an opportunity to reduce the term of your loan from thirty years to a fifteen year loan.
While this can save you a lot of money in interest over the life of the loan, if the
reduction in the interest rate is not at least one percent, two percent is better, and lots
of new loan costs are rolled into the new loan, you may see a very large increase in
your monthly payment. Beware, it could be a bigger increase than you could afford. No
loan other than the existing VA loan may be paid from the proceeds of an IRRRL. If you
have a second mortgage, the holder must agree to subordinate that lein, so that your new
VA loan will be a first mortgage. For further information for obtaining a VA IRRRL, please
contact me at 720-318-5872 or email me at [email protected]

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