Streamline Refinance (IRRRL) for California VA Homeowners
VA Streamline Loans or VA Streamline Mortgages are more formally known as VA IRRRL’s—Interest Rate Reduction Refinance Loans—within the VA. These refinance loans are one of the major benefits of using your VA Loan Benefits over other types of financing.
Why a VA Streamline?
- No out-of-pocket costs: Closing costs can be covered by the lender
- Potentially, no appraisal is required
- No income verification (although verification of employment is usually required). Important for those who are self-employed or have a tough time with stable income.
The California VA Streamline Refinance is available for those already in a VA loan.
Here’s a quick overview of the VA Streamline Mortgage:
- While the VA doesn’t require an appraisal, today’s lenders may require a conventional appraisal to determine that there is sufficient value to refinance the home.
- The new loan can usually be completed without cash needed at closing. The California Veteran’s new loan can include:
- The existing VA Loan
- Allowable fees/charges
- New pre-paid charges (setting up the new impound account)
- Up to two discount points (to lower the rate further)
- New VA Funding Fee (.5% of the loan amount unless the Veteran is exempt due to a service-related disability
- Eligibility (basic) for this loan requires
- Current loan being refinanced is a VA loan
- Loan must be current
- New payment is lower than the current (refinancing from an ARM to a fixed rate is the exception)
- No cash back at closing
While VA Streamline Refinance guidelines allow rental homes with VA Loans to be refinanced using the Streamline (IRRRL), most lenders will only use the Streamline on homes that are currently owner-occupied. Inquire with your lender on their guidelines on this.
You have a second mortgage. What then?:
So, what happens if you have two loans on your property? Maybe you took out a second mortgage to put in a backyard pool or landscape your yard. What happens then?
Easy…so long as the 2nd lien holder (your second mortgage) will agree to going back into second position (called “subordination”), you can refinance the first mortgage using the VA Streamline Refinance. And when you think about it, why wouldn’t the 2nd lien holder agree? You’re lowering your payment on the 1st, meaning it’s easier to make the payment on the 2nd, right?
If you’re wanting to refinance and put two or more loans into one (a VA first mortgage and a non-VA second mortgage), then that would fall under the “VA Cash-Out Refinance”. In that case, you’d need to qualify as on any other loan—including an appraisal, but the costs/rates would most likely be lower than with other options. A California VA Loan Specialist can compare your options for you and help you decide what’s best for your situation.
ARM to Fixed Loan:
If you currently have a VA ARM (adjustable rate mortgage) with rates that are fluctuating and you’d feel better with a fixed mortgage, you can use the VA Streamline Mortgage for that too. Everything—all the benefits, qualifications and steps—are the same as going from one fixed loan to another (as outlined above), you’ll just have a fixed mortgage once you’re done.
The VA Streamline IRRRL is one of the best benefits of choosing a the VA loan. The paperwork is so much easier than with other loans. If you work with a VA Loan Specialist they can answer all your questions, and you’ll find the process really easy.
Home Loan Specialist
Andrew is a Senior Mortgage Banker with years of experience with residential home mortgages. Andrew is proud to specialize in VA Home Loans to help active-duty and retired military personnel realize the dream of home ownership. Andrew and his team are also skilled in Conventional and FHA financing to help homeowners decide on the loan program that suits their needs.
Licensed in CA