Lower Rates Fast With a VA Streamline Refinance
- The VA streamline refinance program lets you take advantage of lower mortgage rates without a property appraisal. Explore whether this loan is right for you.
You can apply for a VA streamline refinance if you want to obtain a reduced rate on your Veterans Affairs mortgage. This program, also called the VA Interest Rate Reduction Refinance Loan (IRRRL), can help you lower your APR and monthly payment if you qualify.
What Is a VA Streamline Refinance?
Like other refinance loans, a VA streamline refinance mortgage allows you to change the length of your mortgage, qualify for a lower interest rate and/or switch from a fixed-rate to an adjustable-rate mortgage (or vice versa). You don't need as much documentation as you would with a traditional refinance loan.
You cannot use the streamline refinance program to cash out your home equity, however. That process requires a full refinance. In addition, you can only get an IRRRL if the VA determines you will benefit financially from this type of mortgage.
Who Qualifies for a VA Streamline Refinance?
You must have an existing VA mortgage to obtain a streamline refinance with the VA. You may be able to refinance an FHA or conventional loan into a VA loan, but you cannot do so through IRRRL since approval requires property appraisal.
Unlike with an initial VA home loan, you do not have to live in the property full-time to qualify for a VA streamline refinance. You can refinance a second home or investment property through this program if you can prove that you've lived in the home as your primary residence in the past. The mortgage company may ask for pay stubs, utility bills and bank statements with the name and address of the property in question.
What Are the Benefits of a VA Streamline Refinance?
You may want to consider a VA streamline refinance for these reasons:
- Lower monthly payments, either by reducing your interest rate, stretching out the term of your loan or both
- Lower overall interest cost over the life of the mortgage if you qualify for a decreased APR
- Funding fee of just 0.5% of the total loan amount, compared to up to 3.6% on a standard VA refinance loan
- The ability to change the loan type if desired
What Are the Downsides of a VA Streamline Refinance?
Consider these possible cons if you're thinking about this type of refinance loan:
- You can only qualify for a VA streamline refinance if you already have a VA loan.
- You can't use this program to buy a new property.
- If you decide to extend your mortgage term, you may end up paying more in total interest over the life of the loan.
If you're considering a VA streamline refinance, compare the interest rate and closing costs across multiple lenders. Shopping around can help you save money on your refinance, whether or not you end up deciding on an IRRRL.
