IRRRL Program Pros and Cons

Low VA Rates Low VA Rates / Published Feb 20, 2018, 1:33 PM

Let's take a closer look at the IRRRL program pros and cons.  IRRRL stands for Interest Rate Reduction Refinance Loan. More commonly, it’s also known as a streamline loan. In this article, we might use both terms but they mean the same thing. If you are a veteran homeowner and are currently looking at possible refinance options than you have come to the right place.

A Closer Look at the VA IRRRL Program Pros and Cons

IRRRL Program Pros

  • Less Interest – The main benefit to doing a streamline loan is that you’re not going to pay as much interest, and that’s the whole reason for doing this. If it didn’t lower your interest rate, then there wouldn’t be any point to taking out an IRRRL. We’ve talked to veterans who are paying as high as 5% interest rate on their mortgage. So by doing the IRRRL, you can lower that rate.
  • Lower Your Term – Along with lowering your interest rate, you also have the option of lowering your term if you desire. For example, when you take out a streamline, you could lower your term to a 15-year if you’re interested in paying off your mortgage as quickly as possible. Or, you could keep your term at a 30-year and lower your monthly payment. The VA IRRRL is simply one of the best ways to save money.
  • No Appraisal – This is another way to save you money, and save you time. It also doesn’t matter what your home is worth. If you’ve lost value in your home (which isn’t the case in today’s market, but it was a few years back), that won’t affect your ability to refinance and do a streamline loan.
  • No Employment – When a borrower changes their employment, it usually affects their ability to get a purchase loan or a cash-out loan, but it doesn’t for an IRRRL. On a VA IRRRL, we don’t need to look at your employment history.
  • No Income – The same works with income. We don’t need to verify your income and we don’t need to calculate your debt-to-income ratio.
  • No Minimum FICO – Lastly, there is no minimum FICO score. So don’t worry about your credit score if you’re interested in taking out a streamline loan.

IRRRL Program Cons

Now we’ll list out the reasons why you might not want to take out a VA IRRRL.

  • Not Enough Benefit to You – This has been a hot topic in the mortgage industry lately and there has been a push to take away some of the VA refinance home loan benefits that veterans currently have. Read more about this topic here on our blog titled A Closer Look at Ginnie Mae’s 2017 APM on VA Refinance Churn. So let’s talk about Net Tangible Benefit and here’s how we’ll explain it. To do a VA IRRRL it’s going to cost you x-amount and you’re going to save y-amount. Then compare the two. If the savings aren’t justified, then you probably shouldn’t do a streamline loan. Every borrower’s situation is different and sometimes it doesn’t make sense to take out an IRRRL.
  • Relocating – If you plan on moving, then it doesn’t make sense to spend time and money to do a streamline. It will only benefit you if you plan on staying in your home.

There really aren’t too many cons to the IRRRL. As you can see, the benefits actually outweigh the cons pretty significantly. If you would like to speak with a VA mortgage expert about the IRRRL program pros and cons and how it could benefit your situation give us a call now at 866-569-8272.