VA Streamline Refinance

When looking to improve your Interest Rate, the VA Offers a Streamline Refinance option, also called the VA to VA or IRRRL Loan Product. A 1st Continental Mortgage Specialist can take a quick look to see if today's rates work for your Streamline Fixed Rate Loan or ARM Refinance.

The VA has set established two basic critical guidelines for qualifying for a Streamline Refinance Loan.

Except when refinancing an existing VA guaranteed adjustable rate mortgage (ARM) to a fixed rate, it must result in a lower interest rate. When refinancing from an existing VA ARM loan to a fixed rate, the interest rate may increase.

In many instances, no appraisal or credit underwriting package is required by VA. In addition, your certificate of eligibility is not required. We'll simply use the VA's e-mail confirmation procedure for interest rate reduction refinance in lieu of a certificate of eligibility.

IRRRL Loans

An IRRRL may be done with "no money out of pocket" by including all costs in the new loan or by making the new loan at an interest rate high enough to enable the Loan Origination Specialist to pay the costs. (Remember: The interest rate on the new loan must be lower than the rate on the old loan unless you refinance an ARM to a fixed rate mortgage).

An IRRRL can be done only if you have already used your eligibility for a VA loan on the property you intend to refinance. It must be a VA to VA refinance, and it will reuse the entitlement you originally used. You may have used your entitlement by obtaining a VA loan when you bought your house, or by substituting your eligibility for that of the seller, if you assumed the loan. If you have your Certificate of Eligibility, take it to the lender to show the prior use of your entitlement.

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.

VA To VA Refinance

The loan may not exceed the sum of the outstanding balance on the existing VA loan, plus allowable fees and closing costs, including funding fee and up to 2 discount points. You may also add up to $6,000 of energy efficiency improvements into the loan.

Adding all of these items into your loan may result in a situation in which you owe more than the fair market value of the house, and will reduce the benefit of refinancing since your payment will not be lowered as much as it could be. Also, you could have difficulty selling the house for enough to pay off your loan balance. You Loan Origination Specialist will gladly let you know when they believe it makes no sense for this loan program.

Finally, 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 lien so that your new VA loan will be a first mortgage.