A VA IRRRL (Interest Rate Reduction Refinance Loan), also known as a VA Streamline Refinance, is a type of refinance option available to veterans, active-duty service members, and surviving spouses who already have a VA loan. The purpose of the IRRRL is to help eligible borrowers refinance their existing VA mortgage to a lower interest rate, reducing monthly payments or switching from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage.

Key Benefits of a VA IRRRL:

1. No Appraisal Required: In many cases, you don’t need to get a new appraisal, which speeds up the process and reduces costs.
2. No Income Verification: Often, there’s no need to verify your income, making the process simpler than a standard refinance.
3. Lower Interest Rate: The primary goal of an IRRRL is to reduce your mortgage’s interest rate, which can lower your monthly payment.
4. No Out-of-Pocket Costs: You can roll the closing costs into the loan, meaning no out-of-pocket expenses upfront.
5. Streamlined Process: Since you are refinancing an existing VA loan, the paperwork and requirements are typically reduced.

Eligibility for a VA IRRRL:

• You must currently have a VA loan.
• You must be able to demonstrate that the new loan will have a lower interest rate than your current loan (unless switching from an ARM to a fixed rate).
• There is generally no requirement for a credit check, but some lenders may still require it.
• The new loan must result in tangible benefits, such as a lower monthly payment or reduced interest rate.

Process for a VA IRRRL:

1. Choose a Lender: While you can stay with your current lender, you are free to shop around for better terms from other VA-approved lenders.
2. No COE Required: Unlike the original VA loan, you do not need a Certificate of Eligibility (COE) again, as you already used it with your first loan.
3. Closing Costs: You can choose to pay the closing costs upfront or roll them into your loan, though this will slightly increase the loan amount.
4. Funding Fee: There is a small VA funding fee (0.5% of the loan amount), but this can also be rolled into the loan. Veterans with service-related disabilities are exempt from this fee.

Restrictions:

• Occupancy Rule: You must certify that you previously lived in the home, though it’s not required that you currently occupy the home.
• Cash-Out Not Allowed: The IRRRL does not allow you to take out cash from your home’s equity. For that, you would need a VA Cash-Out Refinance.

Example:

If you have a VA loan with an interest rate of 4.5% and you qualify for an IRRRL at 3.0%, refinancing could lower your monthly payments and save you thousands of dollars over the life of the loan.

The VA IRRRL is a powerful option for eligible VA homeowners looking to save on their mortgage. If you think you qualify, it’s always a good idea to consult a VA-approved lender who can guide you through the process and ensure you get the best possible terms.