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VA Streamline Refinance Loans

VA Streamline Refinance - Saving Money for Veterans

VA Streamline Refinance - Saving Money for Veterans

There’s been a lot of media hype surrounding the recent release of the HARP 2.0 refinance program. It allows homeowners with conventional loans to refinance regardless of their equity position. However, the HARP program doesn’t apply to VA loans. But Orange County veterans with VA home loans do have another option. It’s called the VA Interest Rate Reduction Loan, or IRRL. This loan is also referred to as a VA streamline refinance.

With interest rates still hovering just above their historic lows, it’s a great time to lower the monthly mortgage payment. For Orange County Veterans who want to take advantage of these rates this loan should be considered. Not only can the veteran lower their payment but closing costs can be financed as well. Therefore, cash may not be required at closing. Best of all, the VA streamline refinance does not require an appraisal or full credit qualifying.  Some specific requirements do need to be met. Here are the VA streamline basics:

  1. The interest rate must be lower than the current interest rate, except when the veteran is switching from an ARM to a fixed rate loan.
  2. The homeowner must have made at least 6 mortgage payments with no late payments in the most recent 12 month history of the loan.
  3. The property must currently be the veteran’s primary home. Or the veteran must sign a statement that the home was their primary home at sometime in the past.
  4. There is still no mortgage insurance. But a .50% funding fee, which acts as mortgage insurance, will be applied. This funding fee can be financed into the new loan amount.
  5. Orange County veterans with a 2nd loan can still participate. The 2nd loan must be re-subordinated. It can’t be lumped together with the 1st into one new combined loan.
  6. Note that some form of appraisal may be required by your lender. Even though the VA does not require one, many lenders do. This can be a reduced form such as an exterior appraisal or AVM.

As long as the loan is less than $700,000, then no income or asset documentation is necessary. The VA streamline refinance is just as its name implies. You do not need to go through the rigors of full loan qualification. You will need a 620 credit score though.

Can you still take advantage of this program if your loan amount exceeds $700,000? Many Orange County homeowners have jumbo loans. Veterans with loans greater than $700,000 but less than $1,500,000 can take part in the program on an exception basis only. A 700 minimum credit score is required and the income and assets must be verified.

Full credit qualifying for a VA streamline refinance is only required for loans in excess of $700,000 and those where the full payment increase by more than 20%. Credit qualifying requires income documentation such as W2’s, paystubs and tax returns.

Other documents that will be required on all VA streamline refinances include:

  • A copy of your mortgage statement.
  • A copy of your DD-214.
  • A copy of your homeowner’s insurance policy.

The VA streamline refinance program gives Orange County veterans a platform to reduce their payment when their equity has been eroded. Rates will likely increase quicker and sooner than homes will appreciate. This program gives veterans the same opportunity that other homeowners have to reduce their payment. Contact your lender to see if you qualify.  If your lender can’t help you, contact me and I’ll be happy to see what your options are.

Scott Storace

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