An IRRRL loan is more than just a funny-looking acronym that makes you sound like a seal when you say it out loud. (Don’t believe us? Say it out loud right now; we dare you.) You need to know what an IRRRL loan is if you’re a Vet looking to refinance your home any time soon. So, put your fins together, and let’s dive into this thing.
What Is a VA IRRRL?
Like the other VA home loan options you’ve already heard of, a VA IRRRL loan is a VA-backed home loan that helps you reduce your monthly payments when refinancing your home. This loan option answers the question, “Can VA loans be refinanced?” (Spoiler alert: YES.)
Refinancing is the process of updating the terms of your current credit agreement for your home loan.
You may be asking yourself, “Why should I refinance my house?” And that’s a fair question. We all know how stressful and downright shi**y the home loan process can be, so why would anyone want to go through a process that makes them have to hammer out all these terms again and do even more math?
Well, the answer is actually a pretty simple one that’s the answer to most questions nowadays, especially where the government is concerned: money.
Refinancing your home can help you get a lower monthly mortgage, effectively keeping more money in your pocket for the things you don’t actually mind spending money on, like Cheetos and energy drinks, you fat lump.
In addition to getting lower monthly payments, refinancing can also help make your payment more stable. For example, you can get your interest rate moved from a variable or adjustable rate to a fixed one, which is the same over the entire life of the loan.
Matters of money and mortgages will never be downright easy, but Veteran refinancing is made just a little bit simpler with a VA IRRRL loan.
Oh shoot, we didn’t cover this already? I guess we thought it was pretty self-explanatory since we already mentioned the refinancing and reduction of payments. For anyone whose brain is lagging today, IRRRL explicitly means Interest Rate Reduction Refinance Loan. Don’t you feel silly for not getting that immediately?
VA IRRRL Requirements
If you want to refinance with the help of a VA IRRRL loan, there are a few requirements you must meet.
- You must already have a VA-backed home loan
- You must be using the IRRRL loan to refinance that existing VA home loan
- You must prove that you currently live or used to live in the home you’re using the loan for
As a side note, the VA also tells us that if you already have a second mortgage on your home, the current holder has to agree to make the new VA loan the first mortgage.
VA IRRRL Calculator
We all know you’re no mathematician, so you’ll need a little helping hand in calculating your VA IRRRL rates. Here’s a detailed VA IRRRL calculator that’ll get you started on your way to understanding what your new payments would be if you invested in a VA IRRRL loan.
Don’t be overwhelmed; we know there are a lot of numbers on that VA IRRRL calculator. Just take it one section, one step at a time, like a kindergartener learning the alphabet. You can do it, kiddo!
Looking to refinance then revamp your home? Learn more about how the VA can help on our Complete Guide to VA Renovation Loans.
How To Apply for a VA IRRRL Loan
Many people think you have to go directly through the VA to get an IRRRL loan; however, this isn’t the case. There is not a specific application you have to fill out initially to receive a VA IRRRL loan. Instead, the process goes something like the following.
1. Find Your Lender
You can go through a credit union, private bank, or mortgage company to get your IRRRL loan. Each institution will have different fees and varying terms, so do your research and find one that fits your needs for your refinance.
ALWAYS be cautious when doing your research. Terms and conditions that sound too good to be true usually are. You should turn tail and RUN from anyone who tells you that you can skip payments or get the lowest rates in the world only with them. We know you’re long past your basic training days, but if you come across lenders like this, you’ll need to live vicariously through your younger self to get far enough away from them.
2. Provide Your Lender With Qualifying Info & Documents
Though you don’t need to fill out any new applications when getting ready for your IRRRL loan, you’ll need to provide existing ones. When you applied for your original VA home loan, you had to present a Certificate of Eligibility (COE). If you have this, you’ll need to show it to your lender. If you don’t still have your original copy, you should be able to request one from your lender via the VA Home Loan Portal.
3. Follow Your Lender’s Lead
Your lender will walk you through the entire process, holding your hand like a grade school kid crossing the road. You may also end up having to pay a VA funding fee. Don’t worry; this is a one-time payment, and it will help to lower the cost of loans in the long run.
You can find out just how much you’ll have to pay, if anything, for your VA funding fee here. For VA IRRRL loans, you’ll usually only pay 0.5% of the loan amount for your funding fee. For example, if you’re getting a loan for $200,000, then the funding fee would only be $1,000.
No one wants to pay an arm and a leg on their mortgage payments, especially when you’ve already sacrificed so much just serving our country. A VA IRRRL loan can make life easier for any Vet looking to save on their monthly housing payments. Since you don’t even have to go directly through the VA, it makes the entire money-saving process that much easier.
No one here is lazy, but it sure as hell is good to know that the VA can help in making one of the most stressful, confusing, and costly processes in our lives just a little bit less stressful, confusing, and costly for all Vets. If you’re already convinced, you can find a list of reputable IRRRL loan lenders here.