If you want to lower your interest rate on a VA loan then a program called the Interest Rate Reduction Refinance Loan (IRRRL) or Streamline Refinance may be the way to go. This loan provides a way for current VA homeowners to reduce or lower their interest rates with no out of pocket expenses and very little documentation. This is only available to veterans who are refinancing their original VA mortgage in which they have used their VA eligibility.

VA streamline refinance bullet points:

• No appraisal is ever required.

• Regular underwriting process does not apply. No bank statements, W2s, paychecks, etc are needed.

• The veteran cannot receive any cash at closing, but can roll in any costs involved.

• You can arrange your VA refinance to be completed with no out-of-pocket expenses. All closing cost and pre-paids can be rolled into the new loan amount.

• You must be current on your existing VA home loan

• Skip up to two monthly payments.

• You receive your old escrow account balance back from previous lender.

• You can finance Energy Efficient Improvements.

A VA IRRRL is a new VA-guaranteed loan made to refinance an existing VA guaranteed loan ( thus VA Streamline Refinance Loan), generally at a lower interest rate than the existing VA loan, and with lower principal and interest payments than the existing VA loan. Usually, no appraisal, credit information or underwriting is required. By utilizing a VA Streamline Refinance a veteran can save thousand of dollars and be able to enjoy the savings from a VA streamline refinance very quickly.

An VA Streamline Refinance (IRRRL) (which is always fixed rate) must bear a lower VA interest rate than the loan it is refinancing unless the loan it is refinancing is a VA Adjustable-Rate Mortgage (ARM).

The principal and interest payment on a VA Streamline Refinance (IRRRL) must be less than the principal and interest payment on the VA loan being refinanced unless one of the following exceptions applies:

The VA Streamline Refinance (IRRRL) is refinancing a VA ARM or VA Hybrid ARM the term of the VA Streamline Refinance (IRRRL) is shorter than the term of the loan being refinanced, or energy efficiency improvements are included in the IRRRL. A significant increase in the veteran's monthly payment may occur with any of these three exceptions, especially if combined with one or more of the following:
- financing of closing costs
- financing of up to 2 discount points
- financing of the funding fee, and/or
- higher interest rate when an VA ARM or VA Hybrid ARM is being refinanced.

If the monthly payment (PITI) increases by 20 percent or more, the lender must determine that the veteran qualifies for the new payment from an underwriting standpoint; such as, determine whether the borrower can support the proposed shelter expense and other recurring monthly obligations in light of income established as stable and reliable, and include a certification that the veteran qualifies for the new monthly payment which exceeds the previous payment by 20 percent or more.

For all VA Streamline Refinances (IRRRLs), the veteran must sign a statement acknowledging the effect of the refinancing loan on the veteran's loan payments and interest rate. The statement must show the VA interest rate and monthly payments for the new VA loan versus that for the old VA loan. If the monthly payment (PITI) increases by 20 percent or more, the lender must include a certification that the veteran qualifies for the new monthly payment which exceeds the previous payment by 20 percent or more.

A VA Streamline Refinance (IRRRL) cannot be used to take equity out of the property or pay off debts, other than the VA loan being refinanced. Loan proceeds may only be applied to paying off the existing VA loan and to the costs of obtaining or closing the IRRRL. Therefore, the general rule is that the borrower cannot receive cash proceeds from the loan. (If necessary, the refinancing loan amount must be rounded down to avoid payments of cash to the veteran.) The one exception is reimbursement of the veteran for the cost of energy efficiency improvements up to $6,000 completed within the 90 days immediately preceding the date of loan closing. Note: Use of loan proceeds for energy efficiency improvements not involving cash reimbursement of the veteran is also an option. .

The maximum loan term for a VA Streamline Refinance Loan is the original term of the VA loan being refinanced plus 10 years, but not to exceed 30 years and 32 days.

The veteran (or surviving co-obligor spouse) must still own the property.

Generally, the party(ies) obligated on the original loan must be the same on the new loan (and the veteran must still own the property). The lender should contact VA regarding a proposed VA IRRRL involving a change in obligors unless the acceptability of the IRRRL is clear based on information and examples in this section.

For IRRRLs, the veteran or the spouse of an active service member must certify that he or she previously occupied the property as his or her home. This is different than the requirement for non-IRRRL VA loans that the veteran must intend to personally occupy the property as his or her home.

No credit information or underwriting is required for a VA Streamline Loan unless

The loan to be refinanced is 30 days or more past due, or the monthly payment (PITI) will increase 20 percent or more.

IRRRL CLOSING COSTS

The following fees and charges may be included in a VA Streamline Refinancing Loan (IRRRL):
Any allowable fees and charges. This includes closing costs from the "Itemized Fees and Charges" list, the funding fee, and the lender's flat charge.
However, there is one limitation unique to a VA Streamline Refinance (IRRRL): While the borrower may pay any reasonable amount of discount points in cash, no more than two discount points can be included in the loan amount.