What Is A VA Streamline?

The VA’s Streamline Refinance program helps veterans reduce their mortgage rate and monthly payments. This is also known as Interest Rate Reduction Refinancing Loan (IRRRL) which removes a lot of the hurdles that prevent applicants from availing other types of refinances. But on the other hand, this type of loan is only available if the applicant has already utilized his or her eligibility for a VA loan on the property or home they plan to refinance. This is also perhaps the most ideal option if you simply want to refinance your current loan and avail of a much lower interest rate.

VA Streamline Basics

The good thing about VA streamline refinance is there are no assumptions allowed. Apart from refinancing a current VA ARM or guaranteed adjustable rate mortgage to a fixed rate, the result of the refinancing must have a lower interest rate. However, since this is a VA to VA loan, the proceeds of an IRRRL can only be used to pay an existing VA loan and not the other types of loans you may currently have. If a second mortgage is present, you need to agree to subsidize that lien which will make your VA loan your first mortgage.

The VA has a funding fee of ½ of 1% of the total loan amount. You have the option to pay it in cash or included it in your loan. There is no need to use the Certificate of Eligibility (CoE) for the refinancing because the lender can use the e-mail confirmation procedure of the VA for interest rate reduction refinance instead of a CoE.

Advantages of VA Streamline

VA Streamline offers a lot of advantages considering the fact that this can be used to convert an adjustable rate mortgage (ARM) to a fixed rate mortgage. Other advantages include:

• Refinancing your existing VA loan and avail of a much lower interest rate.

• VA Streamline can be done with few or no out-of-pocket costs by integrating all costs in the new loan, or by constructing the new loan at an interest rate high enough to allow you to afford the costs.

• As long as the existing mortgage has been paid as agreed for the last twelve months and with updated payment at the time of refinancing, this loan does not need for an appraisal, a credit report, income or employment verifications, or termite report.