VA Loan Refinancing Made Simple

The VA Streamline IRRRL (Interest Rate Reduction Refinance Loan) is a simplified way to drop your mortgage rate to a lower fee. The process is streamlined and requires less paperwork than a purchase. The closing timelines are usually 10-14 business days. It is streamlined because it requires no income and asset verification, no appraisal, and has flexible eligibility requirements. The closing costs are rolled into the loan so there is no out of pocket cost.

We complete the loan application and gather typically your current mortgage statement, mortgage note, driver's license, and homeowners declaration page. We send this into the underwriter and within 24 hours usually have conditional approval. Because these are manually underwritten, the best part is we don't have to do a hard credit pull. We can do a soft pull and close on a soft pull.

Each homeowner has different goals. If it is a long term hold, usually saving 6/8ths of a point to 1% in the rate reduction is where it makes sense, but each situation is unique.

If you are looking to sell your home within the year, there is a cost to refi. A competent lender is going to run the break even point for you to ensure you aren't doing something that doesn't benefit you. Don't chase the rate. Make sure you understand the cost of the refi divided by the savings in the rate to ensure it is worth it for you!

All fees can be rolled in on the VA Streamline IRRRL to include the VA Funding Fee of 0.5%. If you have a VA disability rating then the VA Funding Fee is waived. The other fees involved in the refi are typical credit report fees, title fees, and recording with the county. Some of our partners will waive the lender fee (usually an underwriting or processing fee). If you buy down your rate, then this is on top of the other fees as well. All of these fees can be rolled into your loan.

When it comes to refinancing, for example on a $400k loan with a 7% rate, you look into a refinance where every 1/8 of a point is usually about $28 in monthly payment equivalent.

So if you refinance down to a 6.25% (6/8 × $28 = $168), you would save about $168 a month in principal and interest reduction. If the refinance costs you $4k in closing costs, then your break even point would be 23.8 months. This means if you refinance in 12 months again (as you can refinance every 210 days from your first payment), you are losing about 11.2 months of cost in the refi the first time you did it.

Some of our lending partners are brokers. Brokers have access to over 30 lenders and can shop and secure you the best rate. It never hurts to have a quick conversation about seeing if a refinance is beneficial to you.

Normal Fees

The typical fees associated with a refinance are a credit report fee, lender fee, VA funding fee, title fees, recording fee, and taxes and insurance escrows. If your escrows can't be transferred then you will receive the current escrow balance back after closing in the form of a check and the new lender will collect new taxes and homeowners insurance.

Junk Fees to Avoid

The typical junk fees that you see on refinances are processing fee, lock fee, admin fee, and underwriting fee. Most lenders will waive these on refinances.

You can refinance using the VA Streamline IRRRL every 210 days from your first mortgage payment due date.

There are many different types of refinances you can do, but the rules change from refi to refi.

VA Streamline IRRRL

For VA purposes, you can do the VA Streamline IRRRL which just lets you get your interest rate reduced.

VA Cash Out Refi

A VA Cash Out Refi, on the other hand, is a full documentation loan. The VA Funding Fee is 3.3% if you don't have a VA disability rating to get it waived.

Consult with one of our loan partners to ensure that the refi fits your goals.

Home Equity Lines of Credit (HELOC)

A Home Equity Line of Credit (HELOC) is a line of credit you can borrow against. HELOCs are either fixed or variable. Variable usually has a little better rate but is also variable each year. Fixed is exactly that. You know what you are getting and it doesn't change.

Home Equity Loan (HELOAN)

A Home Equity Loan is a second loan on the property and is paid out at close, where a HELOC you draw on it as needed. The HELOAN usually has better rates and a smaller payment as it is amortized over a longer period of time.

VA disability rating will waive the VA Funding Fee on a purchase or a refinance.

We can do a soft credit pull and close on a soft credit pull.

If your credit has improved, then your rate will be better. If your credit score has decreased, then you will want to ensure doing the refi is still benefiting you as many lenders have blanket rates they usually quote on the higher end of credit scores.