The VA home loan is a phenomenal mortgage program, unlike any other available in today’s mortgage marketplace. The VA loan’s most visible feature is the lack of a down payment requirement. VA loans ask for zero down yet still provide some very competitive mortgage rates. And even with a zero down program, there is no monthly mortgage insurance premium payment found with other low money down government or conventional loans, helping more borrowers qualify. Veterans are also limited to the types of closing costs they’re allowed to pay. No money down, low payments and restricted closing costs make for a very attractive financing package when it’s time to buy and finance a home.
But the VA loan also has an important feature that can be used again after the home has been purchased and it’s called the Interest Rate Reduction Refinance Loan, or IRRRL. Lenders often refer to the IRRRL as a streamline loan due to the vast reduction in documentation required. When you first got your VA loan your eligibility was confirmed by your certificate of eligibility which showed your entitlement amount. When refinancing, the lender will once again request the certificate of eligibility to document the borrower’s eligibility yet this time when refinancing, it takes much less time and much less paperwork.
With the IRRRL, the borrowers do not have to show proof of income. That means no pay check stubs are needed nor is there any reason to provide the last two years of W2 forms. No federal income tax returns, either. If fact, the lender doesn’t verify employment at all. There’s no need for a property appraisal either which saves on the cost of refinancing. Borrowers can even be “upside down” with their mortgage and still be able to refinance with the IRRRL. The only qualifications are the interest rate on the newly refinanced loan must be lower than the current one or the borrowers are switching out of an adjustable rate loan and into a fixed.
The VA IRRRL, or VA streamline, is quite possibly the easiest loan to qualify for as well as document. There’s even no need for a minimum credit score. The only credit history the lender looks for is to make sure that within the previous six months there are no payments made more than 30 days past the due date and no more than one such payment over the past year.