VA Streamline refinance rates

by David Sandberg

One of the benefits that we offer our veterans is access to special home loan programs through the Veteran’s Administration (VA). These loans have a special refinance program, frequently referred to as a VA Streamline. The streamline refinance brings the benefits of the original VA loan forward to a new loan with a lower rate.

VA Mortgages

On first glance, the VA loan may just look like another low-down payment loan program. However, it is even better than it seems. First of all, VA loans can be for 100 percent of the property’s value, allowing the buyer to truly buy with nothing down. Unlike other low down payment loans, VA loans carry no private mortgage insurance. Private mortgage insurance is a type of insurance coverage that banks typically require on loans for more than 80 percent of the property’s value. If the buyer does not pay the mortgage back, the PMI covers the bank in case it sells for less than is owed. Because the VA guarantees VA loans, PMI is not required. This can save hundreds of dollars a month.

To qualify for a VA mortgage, a person must either be serving in the military or be a veteran. People who meet these qualifications simply need to get a Certificate of Eligibility from the VA and have a special VA appraisal done. Other than that, getting a VA loan is much like getting any other mortgage loan except that VA loans frequently have relaxed credit and income requirements.

VA Streamline Refinances

Formally known as the Interest Rate Reduction Refinancing Loan (IRRRL) program, the VA Streamline refinance is much like other refinance programs, but with a few unique benefits. IRRRL loans can go over 100 percent of the original loan amount. Not only can they refinance the old VA mortgage, but they can also include closing costs including up to two discount points and up to $6,000 in energy efficiency upgrades.

IRRRLs are very easy to get. The VA does not require you to get a certificate of eligibility or a new appraisal. They do not even require income and credit verification, although some lenders will. The only charge that the VA imposes is a one-half percent funding fee that, as with other closing costs, can be included in the loan.

The VA also allows you to streamline refinance into a shorter-term IRRRL. Refinancing an old 30-year mortgage into a new 15- or 25-year mortgage has many benefits. The IRRRL itself gets you a lower rate while taking out a shorter loan lowers your rate even more. Refinancing to a shorter-term loan also lets you pay off your mortgage sooner.

VA Streamline Rates

Like any other mortgage, VA streamline rates fluctuate a great deal. However, there is a common trend. VA streamline mortgage rates are typically 25 to 50 basis points below rates on traditional loans, with a basis point being equal to one hundredth of a percent. In other words, while a traditional refinance would carry a rate of 4.05 percent, an IRRRL would have a rate of 3.55 to 3.80 percent. On a $200,000 mortgage, a 30-year fixed rate IRRRL’s payment would be between $28.69 and $56.92 per month less than a traditional 4.05% refinance.

The Interest Rate Reduction Refinancing Loan program represents a significant for the brave men and women who have served the nation in its armed forces. Taking out an IRRRL VA streamline refinances gives them all of the benefits of a traditional refinance with lower cost, easier qualification, lower rates and the ability to upgrade their homes’ energy efficiency.

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