Let’s say you already have a VA home loan, but you want to lower your monthly mortgage payment or shorten the repayment period.
But you don’t want to miss out on any of the benefits of having a VA loan.
What can you do?
The answer is simple.
What you need is a VA streamline refinance.
And it’s possible with a VA Interest Rate Reduction Refinance Loan.
Whew. That’s a mouthful!
So we’ll call it a VA IRRRL (pronounced “Earl”) instead.
CURRENT VA INTEREST RATE REDUCTION REFINANCE LOAN RATES
Before we dive into how a VA IRRRL works and the pros and cons, let’s look at VA streamline refinance interest rates.
Just like interest rates for VA home loans, IRRRL rates can jump from one day to the next.
That’s why working with the right lender is so important.
You want to lock in the best interest rate possible to save the most amount of money. Some lenders will delay processing by dragging their feet or messing up the required VA IRRRL worksheet, and you might end up paying more than you should.
But don’t worry. We’ve got your back.
The Wendy Thompson Lending Team is an experienced VA IRRRL lender. We know what needs to be done.
WHO PICKS CURRENT VA INTEREST RATES?
The main reason you would refinance with an IRRRL is to lower your interest rate.
If you’ve already qualified for a VA mortgage but want to lower your interest rate, you could lower your monthly payments and the interest you pay over the life of the loan.
You might think the Department of Veterans Affairs sets the rates because the VA backs IRRRLs.
It makes sense, right?
But that’s not how it works. The VA has nothing to do with setting the rates!
It’s the individual lender that picks interest rates.
Now, what I’m going to say next is important…
Interest rates can vary from lender to lender!
That’s why working with the right lender right from the beginning is so important. Imagine starting with one lender only to find out you could have gotten a 0.5% lower rate if you would have gone with a different one.
It might not seem like much.But over a 30-year loan? That half a percentage point can add up to thousands of dollars in savings.
FACTORS THAT DETERMINE VA IRRRL RATES
Lenders set their own rates. However, they don’t conjure interest rates out of the blue. Several factors go into deciding what interest rates to offer.
The interest rate of any loan, including a VA IRRRL, depends on current market conditions. If the economy is good? Rates are usually good, too.
The amount you borrow and your repayment term can cause your rate to go up or down.
However, your credit score is also important.
Lenders use your credit score to determine how reliable you’ll be in repaying your loan. Generally, the higher your credit score, the lower your interest rate.
We like to see homeowners have a credit score of at least 640 or more to get the best VA loan rate.
NEW VA IRRRL GUIDELINES FOR 2020
Not everyone can qualify for a VA streamlined refinance. To be eligible for an IRRRL, you must:
- Already have a VA-backed home loan
- Intend to use the IRRRL to refinance your existing VA-backed home loan
- Currently live or certify you used to live in the home
New guidelines are in place for 2020, too. Before, VA loans had a cap on how much you could borrow. The amount was based on the home’s location and hinged on local county limits.
Effective January 1, 2020, VA-imposed caps on IRRRLs established by county were removed.
That can be good news, but keep in mind that lenders can still have (and enforce!) their own limits.
IRRRL PROGRAM PROS AND CONS
With so much to love about a VA IRRRL, there’s a reason it’s called a streamline refinance. However, no loan program is perfect. Here are some of the benefits and drawbacks to consider.
Pros of IRRRL
- Save money by lowering your interest rate
- Skip the appraisal process in most cases
- Can opt for no cash due at closing
- Faster than other home refinancing methods
Cons of IRRRL
- Funding fees apply
- Often come with closing costs
- Can’t get cashback from the equity in your home
READY TO GET A PERSONALIZED VA IRRRL RATE?
If you’re a qualified VA homeowner, you could access one of the easiest yet most powerful refinance options around.
But with the wrong lender?
It could be a nightmare.
Don’t leave your finances to chance. Call the Wendy Thompson Lending Team for the best VA IRRRL interest rate.
Your future self will thank you!