No W2s, No Paystubs, No Problem For This VA Refinance Program
No home finance expert could have predicted it a couple of years ago, but VA home loan rates have now fallen below 4 percent into the 3s. For anyone who is currently a VA loan borrower — even if you got a great rate in 2014 or 2015 — it could be worth looking into a VA Streamline Refinance to reap the benefits of today’s even lower rates.
Before you click away because of other refinance horror stories you might have heard, consider this: the VA Streamline program removes nearly all of the common pain points that you often hear about traditional home refinancing. In other words, the process is seamless, and it can begin saving you money very quickly.
The biggest qualification: You must be a veteran or military service member who is currently a VA loan borrower, and be in good standing with your mortgage payments. That means as long as you were not more than 30 days late on a payment more than once over the past year, you have a good chance of meeting qualification requirements.
But what about all the hoop jumping, back and forth hassles, and tons of fees, you wonder? It can’t be that simple, can it?
Take a look at some of the advantages of a VA streamline, also called an IRRRL, VA Interest Rate Reduction Refinance Loans, or VA-to-VA refinance.
No documentation drama. You already went through the thorough process of applying for a VA home loan in recent years. That paperwork will suffice when you need to start the ball rolling on your VA streamline application. No new banking statements, W2 forms, tax returns, or income verification documents are necessary.
Less waiting around. With less red tape to deal with and limited paperwork shuffling, the VA streamline process tends to move much more quickly than a traditional refinance application process, allowing borrowers to lock in current, historic low rates before they begin creeping back up.
More lenient credit standards. Many VA loan holders are surprised that they can qualify even with damaged credit. While, officially, the VA streamline doesn’t impose a minimum credit score, most VA lenders do. Expect lenders to require a minimum score between 580 and 620 – much lower scores than it takes to buy a home.
Less fees and up-front costs. High closing costs often turn off refinance candidates. When refinance costs like appraisal, origination fee and the like are high, a refinance takes a long time to pay for itself. With the IRRRL, many of the traditional refinance fees simply don’t exist, like the $400-$500 appraisal. In addition, VA refinancing programs do not require borrowers to pay escrow fees, loan application processing fees, or brokerage fees – all of which are extras that are piled on to traditional refinance costs. The one fee you will have to pay is the IRRRL funding fee, which is 0.5 percent of the total loan amount (lower than the 2.3 percent you paid on your first VA home loan). The VA funding fee can even be rolled into the mortgage.
Extra perks to consider. If you’ve been thinking about making an energy-efficient home improvement, the VA streamline allows borrowers to tack an additional $6,000 onto the principal of the loan that they can then use to perform qualified home upgrades. This could be a great way to increase the value of your home, and save you some energy costs in the long run.
With the process so simple and the out-of-pocket costs minimal or even nothing if you so choose, a VA streamline can help you save hundreds of dollars on your monthly mortgage payment. Even if you have a decent rate now, the fact that you can drop it to below 4 percent might just make it worth your while to look into this option. To get started, work with a VA approved lender to see if an IRRRL is a good move for you.