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If you have a VA loan and you have found yourself in a financial bind, you might not be sure what your options are. This can be a very uncomfortable situation to find yourself in and no one wants to lose their home due to a financial emergency or changed financial situation.
The IRRRL program is for an existing VA-backed home loan that needs to have monthly payments reduced or to have the payments made more stable for the long term. This program allows VA home loan owners to refinance in order to help them to keep their homes despite financial difficulties that they did not foresee.
If you have a VA loan and are having trouble making your home loan payments, you might be eligible for this program.
Who is Eligible for IRRRL?
To be eligible for IRRRL you will have to meet some set requirements. If you do not meet all of these requirements you will not be eligible to take part in the program. This is a more limited program than some others that are offered for home loans due to the nature of VA loans.
The other difference between this process and other refinance processes, is that you are not taking money out against the value of your home. For this loan process, you are applying to streamline your payment process to help you to retain your home and make a more comfortable payment each month.
To qualify for IRRL you need to meet these requirements:
- Have a VA-backed loan
- Are using the IRRRL to refinance your existing VA-backed home loan
- Can certify that you currently live in or used to live in the home that is backed by the VA loan
If you have a second mortgage on your home, the holder of that second mortgage must agree to make your new VA-backed loan the first mortgage. This can be a stumbling block for this process in many cases, so you will need to look into this concern before you get too far into the refinance process.
What Does This Program Do?
This program will lower your monthly mortgage payments and get you a lower interest rate. It can also make your monthly payments more stable by moving the loan from an adjustable or variable loan rate to one that is fixed and will not change over the life of the loan.
This is a streamlined program rather than a true refinance program. You will need to keep in mind that there will be closing costs and other fees associated with this process. You will need a budget for these costs before you embark on the refinance. Some people do not realize that there will be fees that must be paid and it can be an added financial shock to know this after the fact.
When Does it Expire?
There is no expiration date for this program. You will be able to access it for this type of loan without any limits on access at this time. You will need to be able to present a Certificate of Eligibility to your original VA-backed home loan entity and show the lender that you have used your prior entitlement as well.
How Do I Apply for IRRRL?
This process needs to be done through a credit union, bank, or mortgage company. You will need to reach out to the lender with your certificate of eligibility in hand. Not all banks or lenders can work on VA loans, so you will need to make sure that the lender you want to work with can help you with this process.
Your lender will advise you about the steps of the process and guide you through the application and closing fees and costs steps as well. You will likely have to pay interest and closing fees even though you are taking cash out against your home through this process. You can include these costs in the new loan so that you do not have to pay upfront or you might be able to make a new loan at an interest rate that will allow your lender to pay the costs. Make sure that you ask all of the questions that you can think of when you are working with your lender so that you feel informed and prepared for this process. This can be a big help to those with a VA loan who have run into financial difficulties and the application process is fairly simple when compared to other loan application requirements for non-VA loans.