Homebuyers that are eligible for the VA home loan program have access to perhaps the best mortgage in the market today. VA is great for buyers that want to purchase a home without any down payment along with limited closing costs. So exactly who qualifies for a VA loan?
Veterans of the armed forces qualify as do active duty personnel with at least 181 days of service. Those with at least six years of service in the National Guard or Armed Forces Reserves qualify as do surviving spouses of those who have died while in active duty or as a result of a service-related injury. But the VA program offers another benefit that other mortgage programs do not – the Interest Rate Reduction Refinance Loan, or “IRRRL” for short.
The IRRRL is a refinance loan program that drastically reduces the paperwork and process required when approving a VA refinance application. Lenders often refer to the IRRRL as a VA streamline refinance. As long as the homeowner’s current mortgage is a VA loan, homeowners can take advantage of the streamlined program. What are some of the advantages of the VA streamline refinance?
There is no need for a new appraisal. This means homeowners can be upside down on their current mortgage and still qualify. There is no minimum credit score required, either. The VA does not require a credit report or an appraisal. However, some individual lenders may require either, but nearly all do follow the reduced documentation guidelines.
Homeowners cannot have more than one payment made more than 30 days past the due date within the previous 12 months and no such late payments within the past six months. * If you have recent late payments due to the COVID pandemic, please contact us to discuss options. There is no employment verification as well. This means you don’t even have to be employed in order to qualify. Homeowners do not need to provide W2’s or copies of your paycheck stubs or LES statements. When you consider the reduced documentation with the VA IRRRL, you can easily see why lenders do refer to this program as the “VA streamline.”
The VA streamline must be used to refinance from a fixed rate to a lower fixed rate and you can also use the program to refinance out of an adjustable-rate or hybrid mortgage into the stability of a fixed rate even though the fixed rate might be a bit higher than you currently have with a variable rate. As it relates to your certificate of eligibility, there’s no need to request a new copy as your lender will handle the duties of keeping your COE active on your loan.
There is no cash-out allowed with the VA streamline but you can roll closing costs into your new loan. You don’t even have to currently occupy the property to use the VA IRRRL as long as you used your VA eligibility when you first purchase the home and the existing loan is still a VA mortgage.
* Homeowners that do have sufficient equity can look into VA Cash-Out refinance. VA will permit qualified borrowers to cash out equity for home improvements, debt consolidation among many other things. This program does require a new appraisal and full income documentation.
If you have an existing VA home loan and have considered refinancing to a lower rate or to switch from a variable rate into the stability of a fixed-rate loan, contact Modern Lending today to review your options. Even if you think you might not qualify due to income or valuation concerns, you should explore the possibility of a VA streamline mortgage.
Are you planning to use your VA benefits to purchase a new home? Be sure to learn more about the special VA Conquest Program
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