If you have an existing VA loan, now is the time you might want to consider refinancing it as an Interest Rate Reduction Refinance Loan (IRRRL). It may sound like a mouthful, but it is a great option for many veteran homeowners looking for VA loan refinancing.
Refinancing a VA Loan
VA loans are mortgage loans backed by the U.S. Department of Veterans Affairs. They offer good interest rates and require low down payments (sometimes none at all for certain qualified borrowers). With interest rates being as low as they are right now, the timing is ideal for many VA loan holders to refinance using the IRRRL program.
The IRRRL is designed to make existing mortgage loans more affordable. It allows the borrower to lower their interest rate to the prevailing market rate and can end up saving a homeowner thousands of dollars over the life of their home loan. For those with VA loans, the IRRRL is an especially great option because it is easy to qualify for and the requirements are more lenient than they are with traditional mortgages.
Here are four reasons why an Interest Rate Reduction Refinance Loan might be the best way to refinance your VA loan:
1. Perfect Credit Not Required
The VA doesn’t set credit score requirements and they don’t require lenders to look at your debt-to-income ratio (DTI) or credit history. As long as you have a history of making your mortgage loan payments on time, your credit rating really shouldn’t matter. Of course, borrowers with a great credit score and low DTI will find even better terms with an IRRRL refinance.
2. Reduce Your Monthly Payment or Pay Off Your Loan Sooner
When underwriting a IRRRL refinance, the lender must offer the borrower a lower interest rate than they currently have. This can save money in one of two ways. You can either shorten the length of the loan or cut down on your existing monthly mortgage payments. Both will save you money in the long run and mean you’ll be paying off more principal with each monthly payment.
3. You Are Not Required to Live in the Home
Most refinancing programs are aimed at people who live in the property they are refinancing. IRRRL does not require the homeowner to live in the home. You will have to have occupied the home at some point during the initial mortgage. This means that you can rent out the property and still benefit from a refinance of your initial VA loan. For military personnel, this is important to know if going through a change of station or if you’ve already moved for your service and held onto the house you lived in.
4. VA Mortgage Refinancing is Easy and Fast
VA loans require less paperwork and requirements than traditional loans when it comes to refinancing. Whether it’s within the IRRRL program or another home refinancing program, it is easy to apply and quick to get approved when you work with a lender knowledgeable about these refinancing options.
For all your VA loan and refinancing needs in San Diego, count on the team at Transparent Mortgage to walk you through all your options and get you the best loan for your situation. We’ve worked with a lot of veterans and active service men and women stationed at our local military bases, and we know how to guide you in the right direction when buying or refinancing a home. Call us today at (619) 701-3906 to learn more about the IRRRL program and other loans backed by the VA.