If you’re a veteran or an active service member with a VA loan, you might have come across the term “VA IRRRL.” But what do all those letters stand for, and what does it mean for you? A VA IRRRL, or Interest Rate Reduction Refinance Loan, is designed to help you refinance an existing VA loan. It’s a streamlined process, perfect for lowering the interest rate or shortening the term of your VA loan without needing any cash back on your primary residence. At Edge Mortgage Inc., we’re here to help you navigate this option and understand how it could benefit you.
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How Do You Qualify for a VA IRRRL?
Qualifying for a VA IRRRL is simpler than you might think. Here’s what you need to know:
- Payment History: You need to have made six on-time payments on your existing VA loan. This shows that you’re in good standing and managing your current mortgage well.
- Waiting Period: You can’t close on the new loan until 210 days have passed since the original note date of your current loan. This waiting period is a standard requirement to ensure stability.
The best part? The process is quick and straightforward because it usually does not require income verification or an appraisal. All that’s needed is a 12-month mortgage credit check. This means these loans can often be completed much faster than other refinancing options, saving you time and stress.
What Are the Costs?
One of the great things about a VA IRRRL is that the costs are generally low. Especially compared to other refinancing options. If you aren’t exempt from the VA funding fee, the fee is only 0.5% of the base loan amount. Other standard fees include title fees, underwriting fees (which are typically reduced for this loan type), and the costs associated with setting up a new escrow account. The best news? You can usually wrap these fees into your new loan, making it even more convenient.
Another perk of the VA IRRRL is that if you time it right, you could potentially skip up to two mortgage payments. Additionally, any overages from payment, interest, or your escrow account will be refunded to you within 30 days of closing. This helps keep the process smooth and straightforward, allowing you to manage your cash flow efficiently.
What’s the Catch?
The VA does have one key requirement to keep in mind. You must break even within 36 months of closing on a VA IRRRL. This means the savings you gain from refinancing must cover the costs associated with the new loan within three years.
How Does This Work?
It’s calculated by taking the total allowable fees, expenses, and closing costs (minus any lender credits), then dividing that amount by the reduction in your monthly principal and interest payments between your old loan and the new one. If this calculation shows that you will recoup the costs within 36 months, you’re good to go.
For example:
- If the fees are $6,000 and your monthly savings is $200, you’ll break even in 30 months, which meets the VA’s requirement.
- However, if the fees are $6,000 and your savings is only $150 per month, it would take 40 months to break even, meaning you wouldn’t qualify under these terms.
This requirement is put in place to ensure that refinancing genuinely benefits you, rather than just adding costs.
Is a VA IRRRL Right for You?
If you’re considering refinancing your VA loan and want a quick, streamlined process with minimal hassle, a VA IRRRL might be the perfect option for you. At Edge Mortgage Inc., we specialize in helping our veteran and military clients understand their mortgage options and get the best possible terms. We have undergone special training for VA loans and we know our stuff! We’ll guide you through the VA IRRRL process and help you determine if it’s the right move for you based on your financial goals.
Edge Mortgage Inc. is your trusted source for questions like: What is a VA IRRRL?
If you’re ready to explore refinancing or have any questions about what a VA IRRRL could do for you, don’t hesitate to reach out. At Edge Mortgage Inc., we’re here to help you save money and make the most of your VA benefits. Contact us today, and let’s get started on lowering your interest rate and making your mortgage work better for you!
We have many 5-star reviews from our satisfied clients
“Working with Edge Mortgage was such a great experience! Keri is incredibly helpful and was always thorough in answering our questions and concerns. She responds in a timely manner and really goes the extra mile to make sure everything is done correctly, which I greatly appreciated. Definitely recommended!” -Nashira
“My husband and I used Keri’s services to refinance our home. Keri was extremely responsive and patient with answering all of our questions and helping us make the best decision for us. She provided great customer service, which is almost non-existent these days. The process was very easy. We were never left hanging wondering what was going on or what the next steps were. Keri was awesome to work with and worked hard for us. I would use her again and highly recommend her services.” -Melissa
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Edge Mortgage Inc. is located in Johnstown, Colorado, and serves Ohio, Colorado, Wyoming, and Nebraska. We offer honest answers and a stress-free process and we have no hidden or extra fees, keeping more money in your pocket. We are your trusted mortgage broker and we are ready to serve you. Call us today at 970-744-0000.
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