Top 5 Reasons to Use a VA Streamline Refinance

Using a VA streamline loan is a smart idea for anyone with the opportunity to do so. It offers a number of benefits to the veteran which will be presented in the following paragraphs. VA loans tend to have more flexibility and to be more attainable due to the fact that more lenders offer them. It is often easier for the veteran to qualify, making it a convenient choice compared to other types of loans. Here are just five of the main reasons to choose a VA streamline refinance!

Using a VA Streamline Loan

  1. The qualification process for a VA loan is much easier than for a conventional loan.
  2. Credit standards are much more flexible. When it comes to other loans, this is typically where many borrowers have trouble qualifying and getting a decent rate. The VA simply looks for a clear 12-month credit history. At Low VA Rates, we have no set minimum credit score requirement. We understand that credit score alone doesn’t prove whether a borrower is creditworthy or not.
  3. There is no down payment required. This payment could be used for many other things, such as investing in savings, paying off other debts, making a larger payment on the home later, or maybe taking a family trip! If the borrower chooses, they can make a down payment, but just keep in mind that it is not a requirement!
  4. The amount that the VA allows the veteran to qualify for is generally quite a bit larger than that of a conventional loan while also offering lower interest rates. (Rates follow the market, but can become even lower if the veteran does opt to make the optional down payment.) A veteran can get a home for up to $1 million and with $0 down! Most states in the United States have a loan limit of $417,000. However, in some states the max goes up to $625,500. Specific lenders in any state will allow higher loan amounts to fund, up to a maximum of $1,000,000.
  5. The government limits the amount that can be charged in closing costs, origination fees, and appraisal fees. There are also no mortgage premiums required. Lenders are prohibited from requiring one. This is because of the VA guarantee put on the loan.

VA Streamline Mortgage Requirements

Are you convinced that the VA IRRRL is right for you? In order to qualify for a VA loan, you must have served at least 90 days during wartime or 181 days during peacetime and have not been “dishonorably discharged.” Spouses (who have not remarried) of veterans who died in war or due to service-related wounds are also sometimes eligible to finance their homes with VA loans.

Another important qualification to remember is that VA streamline loans can only refinance current VA loans. This requirement has earned the VA IRRRL another nickname: VA-to-VA loan. If you do not currently have a VA loan but would like to refinance into one, you would need to do so through the VA cash-out refinance. But if you know you meet these requirements, then get started on the loan application process today. You don’t want to wait for interest rates to go up.

Allowable  Streamline Closing Costs

One of the many reasons to use a VA streamline as said above is that the VA actually forbids the borrower from paying certain closing costs. This gives VA home loans a huge advantage over just about any other loan type out there. By not paying certain closing costs that are generally required otherwise, you could be saving hundreds or even thousands. Let’s take a look at some closing costs that veteran borrowers are allowed to pay:

  • Survey
  • Recording fee
  • Origination fee
  • Title insurance
  • Credit report
  • Appraisal

 

The borrower is not allowed to pay for tax service, document fees, processing, escrow, underwriting, and other costs. But just because the borrower cannot pay them, that doesn’t mean these charges are simply free; they must be paid for somehow. These fees and even the allowable fees listed above can be paid for by either the lender or the seller of the home. Who pays what depends a lot on the individual situation. It is very common for the borrower to negotiate with the seller, offering to pay more for the home if the seller covers closing costs. Speak with your lender and real-estate agent about your options for covering closing costs to learn more.

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Veterans should take advantage of the VA loan if they can qualify for this option. Another perk for the veteran is that if they have any kind of service disability, they can look into getting their funding fees waived as well. There are so many benefits to VA streamline loans that it would be hard to not look into it. It is definitely one to take into consideration when buying a home. Call us now at 866-569-8272 to get started.

 

FAQ; How many payments qualifies an IRRRL

How Many Payments Must I Make on my Loan Before I can do a Streamline?

 

How many payment qualifyThis is another question whose answer varies from lender to lender. As far as the VA is concerned, there is no rule or requirement on how many payments you have to make (generally called a “seasoning” requirement) on a VA loan before you can refinance with an IRRRL. However, the VA does have other requirements for IRRRLs that can affect how frequently they can be done. The VA requires that an IRRRL results in “substantial net benefit” to the borrower. Therefore, unless interest rates dramatically drop immediately after you close on your loan, or something else happens to change your situation, it may be difficult to make a case for substantial net benefit only a short time after you’ve closed your loan.

 

Depending on what lender you go through, they may tell you there is a penalty for refinancing before you’ve met a seasoning requirement of at least 6 payments (6 months) on your existing loan. They may even tell you (or imply) that this requirement comes from the VA. This is simply not true. If a lender tells you this, they are most likely trying to protect their commission from the loan or the revenue from it. In some cases, if a loan is refinanced in less than 6 months from the date of closing, the loan officer or bank may be required to return their commissions or revenue from the loan. This gives the lenders a perverse incentive to prevent you from utilizing your VA loan benefits as fully as possible. If your lender insists that there is a penalty for refinancing before the seasoning requirement has been met, you will be better off finding a different lender for your future needs.

 

Legally, a penalty for refinancing before the seasoning requirement has been reached is not included in the list of acceptable fees and charges the VA allows lenders to charge as part of closing costs. Also, mention of a seasoning requirement is notably absent from the VA Lender’s Handbook, which rules out the possibility that the requirement comes from the VA. The most important takeaway of this is this: don’t let a greedy loan officer or bank keep you from your VA loan benefits. If you can get substantial net benefit from an IRRRL only a couple months after closing your loan, then go for it, and use Low VA Rates to help you. We do not try to force any sort of ‘penalty’ or punishment for you wanting to use your VA benefits early and often.

 

As mentioned above, there has to be a substantial net benefit for the borrower in order for an IRRRL to be approved. Since refinancing with an IRRRL costs thousands of dollars in closing costs (though they can be rolled into the loan), there has to be enough benefit to doing an IRRRL to counter those costs. Chances are, you’ll be limited by practical restraints to a refinance every 2-3 years tops. There are exceptions to every rule, and there will certainly be some borrowers who have good reason to refinance more frequently than that, but generally speaking, there won’t be enough benefit with so little time between closings.

 

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What is considered substantial net benefit? Well, a lower interest rate, for one. A lower interest rate generally qualifies as sufficient benefit, and a lower monthly payment or a shorter loan term can qualify. Refinancing from an ARM to a fixed-rate usually qualifies as sufficient benefit, as well. If you’re not sure whether you will get sufficient net benefit from an IRRRL, give us a call or chat us up here on the website and we’ll let you know. If you’re looking for more information on IRRRLs, check out the rest of Frequently Asked Questions or search our blog for any articles containing the word “IRRRL”. We’ve worked hard to accrue an impressive amount of information on VA loans in general and IRRRLs specifically to help answer any question you might have about them. As always, any questions you have you are welcome to bring up to us over the phone or using our website. Don’t be afraid to reach out – we are passionate about helping you get as much benefit as possible out of your VA loans.

 

Streamline VA Refinance – How Long does it take?

The Streamline VA Refinance Timeline?


How long do streamlines take

The process timeline is a fairly common question we often get about VA streamline refinances. Often, borrowers who are interested in the streamline VA refinance loan would like to get it done as quickly as possible. In cases where the borrower is getting an IRRRL to lower their monthly payment to something manageable, getting a refinance finished quickly can make the difference between becoming delinquent on the loan and staying current. Obviously, one can expect a streamline to be faster than a standard refinance, else what’s the point of having a streamline option. So how fast is a streamline? Each loan is different, but here are some time frames to get you in the ballpark.

 

The rule of thumb for the length of time it takes to get an IRRRL is 30 days. In other words, if you give yourself 30 days to complete an IRRRL, you’re probably safe. That being said, streamlines can be done in as little as 10 days. IRRRLs can be completed so much faster than normal refinances because there is no requirement to have a VA appraisal done on the home, and there is no need to verify income, employment, or assets of the borrower in order to get approved. Simplifying the underwriting process makes the loan process much faster than otherwise. Just because IRRRLs can be completed in 10 days, however, does not necessarily mean that your IRRRL can be completed that quickly. For answers that are specific to your exact circumstance, speak with a VA-approved loan officer and ask how long it will take. For information on common things that can affect the time it takes to close an IRRRL, continue reading this blog post.

 

Of the things that affect the time it takes to get approval, some of them you have direct control over, and some you do not. The single most common reason that IRRRLs take longer than they have to is the borrower not providing the information and documents the lender requests in good time. If it takes you three days to get back with the lender after they’ve requested a document, then you just added three days to how long it will take before approval. When you’re first speaking on the phone with a loan officer to schedule an appointment, ask him or her what documents you should bring with you. Write down a list of every document they tell you. Then ask him or her what other documents are likely to be needed during the process. If you can, bring those to the initial meeting as well. Otherwise, find a way to scan them onto a computer (if they’re not already electronic), then put all of the documents on a thumb drive and carry the thumb drive with you until the loan closes. That way, when your loan officer calls or emails you asking for one of those documents, you can plug your thumb drive into the nearest computer and email them to him or her immediately.

 

There are other things that you don’t have direct control over. For example, if you’re trying to get an IRRRL to refinance a delinquent loan, if it can be done at all, it will most likely have to be sent to the VA for prior approval before the loan officer can close on it with you. Most IRRRLs do not need to be sent to the VA for prior approval, but in cases where the existing loan is delinquent, or in cases where the obligors on the loan are changing (adding a spouse, removing an ex-spouse, etc.) the IRRRL may have to go to the VA for prior approval before the lender can close on it. In other cases where obligors have changed, an IRRRL may not be possible at all. Consult with a VA loan officer to find out if you can get an IRRRL for your VA loan.

Getting the Documents to the Lender

In most cases, if the borrower is prompt with getting the documents and information to the lender, an IRRRL can be completed very quickly. The best way to find out exactly how long your IRRRL will take is to speak with a VA loan officer and explain your specific situation.

 

Seller Concessions – What’s allowed?

Deciphering the VA Lender’s Handbook Chapter 8 Part 3

 

Believe it or not, the VA puts a limit on just how generous the seller can be with handing out value to the borrower. Why? Because sellers will sometimes use excessive concessions to entice a borrower to an unfavorable mortgage or one that the borrower can’t really afford. While we all understand what seller concessions are, to clarify exactly what the VA means by ‘seller concessions’, we’ll use the following definition from the VA Lender’s Handbook: “ a seller concession is anything of value added to the transaction by the builder What gifts are there at closing.or seller for which the buyer pays nothing additional and which the seller is not customarily expected or required to pay or provide.” This definition will become important as we talk about what is allowed and what is not.

 

Common seller concessions include (but are certainly not limited to) payment of the buyer’s VA funding fee, prepayment of the buyer’s property taxes and insurance, gifts such as a television set or microwave oven, payment of extra points to provide permanent interest rate buydowns, provision of escrowed funds to provide temporary interest rate buydowns, and payoff of credit balances or judgments on behalf of the buyer. According to the VA, a seller paying the buyer’s closing costs or discount points appropriate to the market are not considered a seller concession (this is a good thing, because these things are not factored into the overall value of seller concessions).

 

As mentioned above, issues with builders or sellers offering too much in the way of concessions can cause a veteran to get into a home mortgage that they can’t actually afford; their inability to qualify for the loan can be disguised by the excessive seller concessions, which act as ‘compensating factors’ throughout the underwriting process. Since such a situation would completely defeat the purpose of the VA loan program, the VA places a limit on the overall value that seller concessions can reach. Builders and sellers can still use these concessions as a competitive tool, but for VA borrower they cannot be used to the extreme that can put an unqualified veteran into a mortgage that they cannot afford.

 

The limit that the VA places on seller concessions is very reasonable. The combined value of all the seller concessions on the loan cannot exceed 4% of the reasonable value of the property. From the VA lender’s handbook: “Any seller concession or combination of concessions which exceeds four percent of the established reasonable value of the property is considered excessive, and unacceptable for VA-guaranteed loans.” For example, if the home you are buying is valued at $200k, the builder or seller cannot offer you concessions that are worth more than $8,000. While that may seem like a small amount, you’d be surprised how far $8,000 can go towards seller concessions such as a temporary interest rate buydown or paying the VA funding fee. With the VA funding fee sitting at 2.15% for most borrowers, that leaves quite a bit of leeway for more concessions on the part of the seller should they wish to offer them.

 

This is also where the omission of paying for closing costs and normal discount points as part of seller concessions becomes really important. In the example above, $8,000 is in addition to how much the seller wanted to contribute towards the buyer’s closing costs or normal discount points. For example, right now ‘normal’ discount points could be considered two points on most mortgages. On a $200k home, those two discount points would probably be around $2,000 apiece, with closing costs for the borrower in the several-thousand dollar range as well. The seller could hit $13,000 in value to the buyer without breaking a sweat. Of course, this is just an enumeration of what the VA allows; what a seller is willing to offer is another story entirely. Find out what the seller or builder of a home is willing to offer in the way of concessions, and you might be able to get more money out of them than you originally thought, or than they originally offered. If you have any questions about seller concessions, feel free to contact us here at Low VA Rates.

FAQ; Getting Cash back on a streamline

Can I Get Cash Back at Closing of a Streamline?

 

VA streamlines, also known as Interest Rate Reduction Refinance Loans, or IRRRLs, are interesting beasts. They are quite different from a new purchase loan or even a cash-out refinance. The purpose of an IRRRL is to help a veteran get a lower interest rate on their existing VA loan with as little hassle as possible. Since the purpose of an IRRRL has nothing to do with getting cash back, it doesn’t have a whole lot of options for borrowers looking to get cash for something out of their mortgage. That being said, there are a few ways that you can (sort-of) get cash out as a result of your IRRRL. We’ll cover the ways that you can get cash back on an IRRRL, after we go into detail about what the IRRRL is and why it doesn’t offer a straightforward cash-out option.

Cash Back at Closing

In a normal refinance, a borrower is able to get cash out because they have a certain amount of equity in their home. A borrower is limited in how much cash they can get out by how much equity they have. In order to calculate equity, a VA appraisal needs to be done on the home. Since, in an IRRRL, a VA appraisal does not take place, the value of the home and thus the amount of equity the borrower has in the home cannot be calculated, therefore, since the lender has no way of knowing how much cash the borrower would be eligible to receive, no cash can be given to the borrower at closing. Giving the borrower cash-out on the refinance also increases the loan amount above what the borrower still owes on the home, which brings into question whether the borrower has sufficient income and reliable employment to cover the new loan. In order to determine that, income and employment verification must be done. Since the lack of a VA appraisal and income verification are two of the biggest things that make an IRRRL a “streamline” option, it would defeat the purpose of the IRRRL program to offer cash back.

 

Now, hopefully that makes sense and it is clear that the VA isn’t just saying ‘No’ to cash-out on IRRRLs because they want to. The only ‘real’ way to get cash back on an IRRRL is to not get cash back from the IRRRL itself, but to get an EEM (Energy Efficiency Mortgage) on top of the new loan. You can get an EEM with your IRRRL without complicating the process too much, and an EEM can be made for as much as $6,000. The catch? An EEM can only be used for making energy-efficient improvements to the home that is securing the new loan. The second catch? The VA itself (and most lenders) demands very detailed information on the improvements being made. You will need to get quotes from professionals, price out materials at a home improvement store, and come up with a fairly precise estimate of how much money you need to make the improvements. The changes will need to be analyzed (your lender can help with this) and projected savings on monthly utility bills need to be calculated. If the improvements aren’t going to save more money than they cost within a reasonable time frame, they will not be approved.

 

Money Back From EscrowThere are two other ways you could possibly end up with cash in your pocket at the end of an IRRRL: you might get a small refund for any amounts for which you were overcharged due to a miscalculation or error in the loan process. The VA limits this amount to $500 (if a lender makes more than $500 worth of errors, you may want to consider switching lenders). The other way is a possible refund of your existing escrow balance from the old loan. The only way this amounts to actual cash back is if the balance in your existing escrow was higher than it needed to be (you were paying slightly more into the escrow account than was actually needed to pay insurance and property taxes).

 

So getting cash back on an IRRRL is only an option if you want to get an EEM and make energy-efficient improvements to your house, and it’s a lot of homework to get that.

 

Specific Questions on When You Can IRRRL

No, IRRRL is not some foreign version of the name Earl, though it does sound exactly the same. Technically, IRRRL is not a verb, either, but once you know what an IRRRL is, you’ll know what someone means when they use it as one. IRRRL stands for Interest Rate Reduction Refinance Loan. IRRRL is the VA’s streamline refinance option. A streamline refinance is where the information for a refinance is largely taken from the previous loan, cutting down on most of the time and grief associated with underwriting a loan. Streamline refinances are different from typical refinances because a typical refinance is handled nearly identically to a new purchase loan; you’ll need to get another credit check, fill out a whole application with income and employment information, the whole 9 yards. The VA streamline refinance option, known fondly as IRRRL, avoids most of that hassle and allows the lender to use existing information for the most part.

moneyandhome

Now let’s get specific. Let’s say we have a borrower who has been using a VA loan to pay off his house. He’s now in the process of refinancing his home with an IRRRL, but plans on renting the house later and is hoping to purchase an even bigger home with his VA loan benefits. Can he do this? Short answer: that depends. Long answer: start with the short answer and read on through the rest of the article. For our borrower (let’s call him Fred), there are a few important questions that need to be answered before he can get a definitive “yes” or “no” on his dilemma. One of the first questions we would need to ask Fred is how much of his VA loan entitlement he has left, if any at all. If the answer to this question is “not enough” or “none”, then we need go no further; Fred cannot get a bigger home after he IRRRL’s his current one.

If Fred gets past the first question, he faces another one: What is his current debt-to-income ratio and what would it become upon purchasing a second home with his VA loan benefits? The magic number here is 40, as in 40%. If either of the above debt-to-income ratios is above 40%, then Fred’s hopes and dreams get squashed like the frog from Frogger. These two questions really have one goal, and that is to ascertain whether Fred can really afford a second loan. If Fred can’t, then there’s no way he’ll be able to use his VA benefits to purchase another home. Of course, Fred’s probably wondering if the amount he’ll be charging tenants for rent on the first home can be used to offset his debt-to-income ratio. The answer to that question hinges on a far more important question: is Fred’s lender willing to work with him?

There are some specific rules regarding IRRRLs in the VA Lender’s Handbook, or VA Pamphlet 26-7. Essentially the rules say that the veteran’s entitlement will remain the same before and after the IRRRL. From the Handbook: “No additional charge is made to the veteran’s entitlement for an IRRRL; such as, the amount of the veteran’s previously used and available entitlement remains the same before and after obtaining the IRRRL.” In other words, if Fred has enough entitlement leftover to buy a second home before he gets an IRRRL, he’ll still be able to after his IRRRL. On the flipside, though, the original entitlement that Fred used to get the first loan will not be restored in any amount until the IRRRL is paid completely off.

So theoretically, if Fred has enough entitlement left to buy a second home, he will be able to get the bigger home he so strongly desires. However, we still have one big question to resolve: Will the lender work with Fred? This is not an automatic yes. If Fred can safely answer the first two questions affirmatively, the lender can still run Fred through the proverbial ringer and check out all his financial qualifications, credit scores, income information and any other compensating factors that may come into play, and is never obligated to approve a loan. That being said, if Fred can reasonably afford the loan and there’s not too much of a risk that he will default on either loan, the lender would be a fool not to allow it, because it means more money for him. Usually, if the borrower can financially handle the second mortgage, the lender will approve the loan and the borrower can purchase their second home.

When an IRRRL Can Get a Little More Complicated

The VA offers a streamline refinancing option called the Interest Rate Reduction Refinance Loan, or IRRRL for short. As the name implies, the purpose of the IRRRL is to offer veterans a streamline refinance that can result in a lower interest rate, and generally a lower monthly payment. The IRRRL is a great option for veterans hoping to get more favorable terms on their mortgage for the rest of the loan. Refinancing in general can be done for one of several reasons: it could be that the borrower has saved up a large sum and would like to take a chunk out of the remaining principal all at once, then get new terms based on the remaining loan amount. It could be that the borrower is looking for a way to acquire a relatively large sum of money for a major purchase like a car or to start a business, so they refinance for an amount slightly larger than what they still owe on the home. And last, it could be simply that the borrower is looking for a lower interest rate and lower minimum monthly payment, and they now qualify for a better interest rate.

Streamline refinancing is usually a very attractive option because it usually does not require any further underwriting – the majority of the information is transferred over from the previous mortgage that the refinance is replacing. It would naturally come as a shock, then, when many borrowers applying for an IRRRL are asked to complete a new credit application or have their home re-appraised. Generally speaking, the VA does not require these things to be done over in order to apply for an IRRRL, but like most things in life, there are exceptions to this rule. What those things might be, well, that’s what we’re covering here. It may come as a relief that much of it hinges on the borrower.

For the most part, any IRRRL that would require a new credit application or appraisal would do so because of the refinancing needs of the borrower. Usually, the reason a borrower has for wanting to refinance and the results they’re hoping to see from the refinance can necessitate a new credit report and/or home appraisal. More specifically, the borrower’s wants or needs might end up raising the monthly payment from what it used to be. This is where a potential problem arises; just because the borrower was able to meet the previous monthly payment does not mean they will be able to meet a higher one. These borrowers can still get an IRRRL, there are just more steps involved.

The VA starts to get uneasy when the monthly payment is going to increase by 20% or more. In other words, if a $1000 monthly payment goes up to at least $1200, the VA will have extra steps to go through before the IRRRL can be approved. At that point, it means that the lender needs to go through the necessary paperwork to establish that the borrower has the income and stability to support the new amount. The VA regulations state:  “If the monthly payment…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…” But wait, folks there’s more.

Not only do those underwriting steps need to be repeated, but the lender must also provide a certification that the the borrower is financially prepared to take on the higher monthly mortgage payment, and the borrower and lender must both sign a statement that acknowledges that they understand the effect that the IRRRL will have on the monthly payments and interest rate. The statement must take all of the pertinent information from the previous loan and the new loan and compare them side-by-side, so that there is no way to misunderstand what the effects of the new loan will be.

Even in cases where the VA does not require an appraisal or credit check, the lender has flexibility in being able to require an appraisal if it is appropriate in the given situation, but they may be expected to account for and explain why an appraisal is being required.

Using a Streamline Refinance – What’s the Maximum You Can Get?

The VA has a streamline refinancing option available to VA-eligible borrowers. The VA’s streamline refinance option is called the Interest Rate Reduction Refinance Loan, or IRRRL for short. Refinancing a mortgage essentially means getting another mortgage that pays off the existing one and starts anew, usually with a lower interest rate. Refinances can also result in less principal to pay off if the buyer puts cash in, or a lump sum for the buyer to have as extra money for another purchase if the buyer wants to take cash out. A streamline refinance is different from a regular refinance option in that the loan application information from the original loan is largely re-used, making the underwriting process and the amount of fees involved with the refinance much smaller.

Refinances, especially streamline refinances, vary in process and requirements for each type of loan and even from lender to lender. For a VA loan, regardless of what kind of loan you have (ARM, Hybrid ARM, fixed-rate, etc.) the streamline refinance option available to you is the IRRRL. The day you apply for a new mortgage on a new home you’d like to buy, you’re most likely not thinking much about the time when you’ll be refinancing that loan, unless you’re quite the forward thinker. After life happens and tough economic times hit, a streamline refinance option may be the thing that helps you make ends meet, or just make life for your family a little more comfortable. Refinances, especially a VA streamline refinance, can get you a lower interest rate and lower monthly payments, easing the burdens on your bank account.

The VA takes care of those paying off VA-guaranteed loans. It is actually required for a streamline refinance to provide a certain level of “net tangible benefit” to the borrower. Which means that if you use an IRRRL on a VA loan, you must have either a lower monthly payment or some other form of net tangible benefit that you receive as a result of getting the IRRRL. This is just another way that the VA helps look out for its veterans. But just how large can this net tangible benefit be? How much can the IRRRL be used for?

Back to the new first-time home buyer who is just applying for their VA loan for their home. This person is wondering what the maximum amount he can get for his loan is. Generally speaking, VA loans are limited to what the appraiser deems to be the reasonable value of the property, as well a relatively small amount for energy efficient upgrades to the home and the VA funding fee. Per the VA lender’s guide: “the amount of the loan to the reasonable value of the property shown on the Notice Of Value plus the cost of energy efficiency improvements up to $6,000 plus the VA funding fee”.

Knowing that, we can establish a pretty reasonable expectation for how much an IRRRL might be approved for. An IRRRL is very similar to a regular loan, with some differences. Instead of the reasonable value of the home as the base amount, an IRRRL uses the amount that the borrower still owes on their current VA loan. In addition, another $6000 of energy efficient upgrades can be added onto the amount, as well as certain allowable fees and charges, two discount points, and the VA funding fee. Those additional items will bring your monthly payment up even as a better interest rate brings it down, so it may be a toss-up whether you decide it’s worth it. It comes down to the purpose of refinancing in the first place.

Remember that if your monthly payment increases by more than 20% as a result of the IRRRL, the VA requires that a new credit check be completed using current information. That’s an extra step and hassle, and it may significantly affect the interest rate you get offered. It’s important to evaluate how many ‘extras’ you can handle and still have mortgage terms that will serve you and your family best in the long run. As always, if you have more questions, seek the advice of a VA-approved lender.

VA’s Streamline Refinance Program

The VA’s Streamline Refinance program, also known as a “VA to VA” loan or Interest Rate Reduction Refinancing Loan (IRRRL), allows you to lower the interest rate on your mortgage with few or no out-of-pocket costs. This is only available to you if you have already used your eligibility for a VA loan on the property you intend to refinance, and is probably the best option for you if you just want to refinance your existing loan at a lower interest rate.

There are advantages to having an IRRRL.  As was mentioned before, you can refinance your existing VA loan to a lower interest rate.  This loan can be done with “no out of pocket money” by including all costs in the new loan.  The VA does not require an appraisal, income or employment verifications, or a credit report or termite report, as long as the current mortgage has been paid as agreed for the last 12 months and is up to date at the time of refinancing.  You are also allowed to include up to $6,000 in your refinancing loan for the purpose of energy efficient home improvements.

Except when refinancing an existing VA guaranteed adjustable rate mortgage (ARM), which is an interest rate that periodically adjusts based on an index from the lender, to a fixed rate, it must result in a lower interest rate, or you will not qualify.  When refinancing from an existing VA ARM loan to a fixed rate, the interest rate may increase.

Below are some tips and facts that you should keep in mind when trying to decide whether this type of refinance is right for you:

·        Although no appraisal or credit underwriting package is required by VA, your lender may require an appraisal and credit report anyway.

·        A certificate of eligibility is not required from the VA.  Your lender can use the VA’s e-mail confirmation procedure for interest rate reduction refinance in lieu of a certificate of eligibility.

·        Although a Streamline loan may be done with “no money out of pocket” by including all costs in the new loan, you could also make the new loan at an interest rate high enough to enable the lender to pay the costs.  But remember, the interest rate on the new loan must be lower the rate on the old loan unless you refinance an ARM to a fixed rate mortgage.

·        No lender is required to make you a IRRRL, but any lender of your choice may process your application for an IRRRL.

·        While it may be the best place to start shopping for an IRRRL, you do not have to go to the lender you make your payments to now or to the lender from whom you originally obtained your VA loan.  In fact, Veterans are strongly urged to contact several lenders. There may be big differences in the terms offered by the various lenders you contact.

·        Some lenders may try to contact you and fool you into thinking that they are the only lender with authority to make IRRRLs.  Remember, any lender may make you an IRRRL.

·        An IRRRL can be done only if you have already used your eligibility for a VA loan on the property you intend to refinance. It must be a VA to VA refinance, and it will reuse the entitlement you originally used.  You may have used your entitlement by obtaining a VA loan when you bought your house, or by substituting your eligibility for that of the seller, if you assumed the loan.

·        The occupancy requirement for an IRRRL is different from other VA loans.  When you originally got your VA loan, you certified that you occupied or intended to occupy the home.  For an IRRRL, you need only certify that you previously occupied it.

·        The loan may not exceed the sum of the outstanding balance on the existing VA loan, plus allowable fees and closing costs, including funding fee and up to 2 discount points.  As previously mentioned, you may also add up to $6,000 of energy efficiency improvements into the loan.

Some lenders offer IRRRLs as an opportunity to reduce the term of your loan from 30 years to 15 years. While this can save you a lot of money in interest over the life of the loan, if the reduction in the interest rate is not at least one percent (two percent is better) and lots of new loan costs are rolled into the new loan, you may see a very large increase in your monthly payment.  So research which IRRRL, or Streamline refinance, is better for you!

 

Time May Be Running Out To Refinance

Have you considered the VA IRRRL but haven’t refinanced yet?  Well your time may be running out.  Fed Chairman Ben Bernanke discussed how the central bank might wind down is financial easing policy and that set off a spark of activity in the markets.  He stated that the Fed could scale back the pace of its bond purchases at one of the “next few meetings” if the economic recovery looked set to maintain a forward momentum.  As a result of his statements, interest rates rose and the mortgage industry braced for the worse as overall application activity was down 8.8 percent and refinance applications were down 12.3.

Consider the following benefits of the VA IRRRL and ask yourself, “Why haven’t I taken advantage of this yet?”

The VA Streamline refinance home loan is without a doubt the best mortgage refinance loan on the market. No other refinance loan program is as simple and easy to qualify for and there are so many unique benefits that come along with it. Although, In order to do a VA Streamline refinance, your current loan must be a VA home loan.

One of the biggest benefits of the VA Streamline refinance is that you do not have to go through credit qualification.  There is absolutely no need for lenders to pull your credit history and look at your scores. However, your existing mortgage must be current and you cannot have had any more than one thirty- day late mortgage payment within the last 12 months. In order to do a VA Streamline refinance, your current loan must be a VA home loan.

Another benefit is that the regular underwriting process does not apply. Your lender is not going to check to see how much money you make. So you do not need to send in bank statements, W2’s, paychecks, etc. Since you have been making your mortgage payments, they know that you have the means to keep it up. Along with this, lenders are not going to be calling your employer to make sure that you are still working with them before considering giving you a loan. With a VA Streamline refinance a income verification is no issue to you at all, since they will not be doing that.

VA Streamline refinances in most cases can allow you to arrange your refinance to be completed with absolutely no out of pocket expenses. All of the closing costs and pre-paid can be rolled into the new loan amount and on top of that there is no appraisal required. As you can see there are so many unique benefits of a VA Streamline refinance as listed above, if it sounds like this is for you, take advantage of this amazing opportunity.

But is the refi boom really over?  Well according the Mortgage Bankers Association, it’s starting to wind down as they are reporting a decline in mortgage applications.

“”We have been expecting that refinancing volume would drop pretty sharply in the second half of 2013,” said Mike Fratantoni, the MBA’s vice president of research and economics.  “This refinancing boom has been going since late 2008, early 2009. The best credit borrowers have been able to refinance a couple of times. As rates tick above those levels, that group of borrowers is no longer going to have an incentive to refinance.”

Fratantoni expects refinancing of mortgage applications to drop significantly from current levels “to below 50 percent before the second half of the year,” he said. “Right now our forecast is a 74 percent refinancing share in the first quarter, 67 percent in the second, 46 in the third, and 42 in the fourth.”

In 2014, refinancing applications will account for about 36 percent of all mortgage applications— which is less than half of their current stake.

So is it time to panic and rush into anything?  Maybe, maybe not.  Not everyone is pessimistic on what the market is going to do.

Bob Walters, the chief economist at Quicken Loans says the following. “I think the Fed will hold strong to make sure the economy is on solid footing.  I think we’re good through 2013, going beyond that, it starts to get a little fuzzy.  The market’s starting to price some of that uncertainty in.”

By the end of this year we could see rates higher but not by a lot.  Rates could hover anywhere between 4.25 and 4.75 percent on a 30 year fixed mortgage which is up from the current par pricing of 3.75 percent.  We could see refi’s drop to half or slightly more than that of all mortgage applications by the end of the year.

Even though refinance application are down nationally, we are beginning to see that loan customers are considering different loan products, namely adjustable rate mortgages because they offer such low rates for periods of up to 7 years on a VA Hybrid.

Consider the following: Most 30 year mortgages are only on the lenders books for a period of 5 to 7 years before the consumer refinances again.  With VA Hybrid rates at or below 3.5% they are a great option for anyone looking to lock in savings.

In closing:

The current market condition is a “good-news, bad-news” situation.  The economy seems to be finally see an improvement and getting its legs back.  As a natural course, interest rates are going to be going back up.  For any homeowners that are still waiting for interest rates to fall even further, that time may have passed. If you continue to wait until the end of the year to refinance you may end up with a rate that is much higher than it is today.  Whether you decide to take advantage of the current 30 year rates, reduce the term of your loan or go with an adjustable rate mortgage, it may be time to pull the trigger on refinancing if you haven’t done so already.

VA Streamline with Broker vs. U.S. Bank

Typically when homeowners think of using a broker to refinance their loan they instantly assume there are additional fees and higher interest rates than going directly through the lender.  However, this is not usually the case.  Veteran homeowners usually will save additional money going with a broker than directly getting a VA streamline with U.S. Bank or other lenders.  Here are four typical questions and concerns military homeowners have when looking to refinance their VA home loan.

U.S. Bank VA Streamline Refinance

1. Are brokers typically more expensive than going directly with the lender?

The simple answer is NO.  This is a misconception that has to exist among homeowners for the past several decades.  Many lenders, like U.S. Bank, give brokers better deals and interest rates than what they are actually offering.   If a veteran walks into U.S. Bank today looking to refinance a VA Loan there is a very good chance the homeowner will come out of pocket more money than going with a broker.

2. Do I have more closing fees going through a broker?

The bank will cover the closing costs associated with adding a third-party (or broker) in on the loan.  So the homeowner DOES NOT come out of pocket any additional fees to refinance with a broker.  So how does the broker make money?  If a broker for U.S. Bank closes a loan, U.S. Bank will give the broker a commission on the refinance.  This means the BANKS pay for the broker NOT the homeowner.  Banks are more than happy to give brokers discounts and commissions because ultimately any refinance can be financially beneficial for the bank.

3. Are the interest rates with the direct lender always better?

This is another HUGE misconception associated with refinancing with a broker.  In fact, many times the rates are better with a broker than going directly with the lender.  Once again, because many brokers close thousands of loans they are given “wholesale” rates which are typically better than the rate through the actual lender.  How are they able to do this? Brokers that are converting thousands of dollars of loans qualify for what leaders describe as “wholesale” rates which are much better interest rates than going directly with the lender or the “retail rates”.

4. Is the customer service with a broker significantly worse than a lender?

Lenders like U.S. Bank have multiple functions and refinancing home loans is only a small part of its overall business.  VA Home loan brokers are 100% dedicated to helping military families  get refinanced and do not carry the load of other business functions.  Because of this, brokers are able to dedicate more personnel and time to refinancing a VA home loan then a bank would be able to do.  In fact, many brokers specialize in specific types of home loans (Ex. VA, FHA), giving them an unmatched expertise over going directly with a lender.  Many loan officers associated with banks have never dealt with a VA home loan and may attempt to steer military homeowners into an inferior loan.  Because lenders have multiple functions it is basically impossible for them to dedicate the amount of resources needed to provide better service than a broker.

After analyzing the information, it’s important to realize that lenders like U.S. Bank are not always a bad option to refinance your VA home loan.  However, the misconceptions about brokers sometimes blind veteran homeowners into worse interest rates and more costs.  Knowing the truth behind these four questions can help veteran homeowners make an educated decision when deciding to streamline their VA home loan.

U.S. Bank VA Streamline Refinance

As always veterans, make sure to check VA Streamline rates through U.S. Bank, LowVARates.com, and other brokers to see which can offer you the best streamline for your situation.

The Walmart Priced VA Streamline with Chase Bank

Many veterans think going directly to the source to refinance their VA home loan will guarantee they will receive the lowest interest rate on the market.  This is not always the case.  Lenders are willing to give broker loan companies wholesale or cheaper pricing because of a number of loans the lender closes.  Companies like Chase can afford to give a broker closing hundreds of loans a lower interest rate than they can give one person walking into the bank looking to lower their rate.  This provides a great opportunity for veteran homeowners to take advantage of lower interest rates than they can get directly from the lender. To further emphasize the point, let’s compare Chase giving discounted rates to brokers to buying an item at Walmart.

Chase Bank VA Streamline Loan

Walmart purchases thousands and thousands of dollars of product from companies all over the world.  If someone enters a Walmart store today to buy a box of Lucky Charms for $3 would be cheaper than going directly to General Mills and purchasing that box of Lucky Charms.  Why?  Because Walmart buys thousands to millions of dollars of product from General Mills so they offer major discounted prices to Walmart.  If you decided to go buy one box of Lucky Charms through General Mills the cost of the box of cereal and the time it would take you to get that box of cereal would make purchasing the item through Walmart an obvious choice.

The same concepts apply to refinancing your VA home loan.  If a veteran walked into Chase Bank today to refinance his home loan, there is a good chance the interest rate they offer would be higher than going with a broker approved by Chase. Why?  Brokers closing hundreds to thousands of loans are given discounted pricing giving the consumer a better interest rate.

The owner of LowVARates.com, Eric Kandell, has been in the VA mortgage industry since 1997 and understands brokers can offer wholesale rates.

“When we show some of the representatives at various banks the wholesale rates we are able to receive, most of the time they tell us they are unable to compete with those rates,” Kandell said.

Chase and other banks still have the capability to refinance your home loan through one of their branches or offices.  As a consumer if you refinanced through one of Chase’s offices that would be considered dealing with a “retail channel.”  A retail location would basically be the Chase Bank in your local town. If you were to call Chase Bank today you would have access to their “retail rates”.  However, if you contact a Chase broker you would have access to their “wholesale rates”.

Giving brokers the discounted or “wholesale” rate, makes perfect sense for both the broker and the bank, just like it makes sense for General Mills to offer Lucky Charms at a discounted rate to Walmart.  Chase understands that brokers, like LowVARates.com, can close thousands of loans nationwide and make them more money than trying to ONLY sell loans directly through them.

Veterans and military families with high-interest rates should make sure to check their options to ensure they are making the best financial decision for their families.  With rates at historic lows, many veterans can be lowering their monthly payments hundreds of dollars per month and save thousands of dollars over the life of the loan.

Chase Bank VA Streamline Loan

Make sure to check VA streamline rates through Chase Bank, LowVARates.com and other brokers to see which can offer you the best streamline for your situation.

How to Shop for the Best VA Streamline Deal Among Lenders

Lately, it seems more and more VA homeowners (people with VA home loans from the Dept of Veterans Affairs) are shopping around and getting lenders to compete for their loans.  This is a very good sign on the surface and I am glad to see a more educated homeowner than in years past.

Unfortunately, however, there are lenders out there who know how to trick our Veterans into thinking they are getting the best deal, when in all reality, they are not!  I am hopeful that this blog post will shed some light and make the consumer (our military homeowners or even buyers) more intelligent and ready to shop for the best VA Streamline Rate as possible.

You need to understand some key terms first:

Consumer paid vs Lender paid- Since April 2011, it is illegal for a loan originator to make money on a loan from charging the borrower an origination fee or charge and having compensation directly from the lender.  A loan officer can charge you origination charges and have you pay him/her for doing the loan or the lender can pay the loan officer and he/she will charge you nothing

Origination fees– Any fee paid to the lender or the originator by the borrower. Normally the 1% origination fee charged by the loan officer and then any underwriting or processing fees.

Discount points– fees paid for by the homeowner to buy down to a lower than market interest rate.  VA loans can allow for up to 2 discount points or 2% to be paid by the Veteran

3rd party fees-These fees are on every loan and have to be paid for by the borrower on all Lender Paid transactions.  Do not be fooled, if you are told there are no 3rd party fees or do not see fees like, title insurance, title exam, escrow, notary, signing, tax, stamps etc then run for the hills; you are dealing with Mr. Shady!

Pre-paid and escrows/impounds– All VA loans will require an escrow account be set up and pre-funded at the time of closing.  In addition to having an escrow account cost associated with your loan, you will also see pre-paid interest on your loan.

APR- Annual Percentage Rate. The annual rate that is charged for borrowing expressed as a single percentage number that represents the actual yearly cost of funds over the term of a loan. This includes any fees or additional costs associated with the transaction.

Good Faith Estimate– The form given to you where all origination fees, 3rd party fees, and prepaid interest and escrows are broken down for your viewing and research.
The best way to ensure you are getting the absolute best possible deal on your VA streamline loan is to compare the APR of all of your offers and also the ADJUSTED ORIGINATION CHARGE!  The video above explains this a bit better, however just ask your loan officer to indicate very visibly on your forms or paperwork, what your adjusted origination charge is.  The lower the adjusted origination charge, the cheaper the cost of that loan.

If you are shopping a loan here at Low VA Rates, we invite you to challenge us to our $250 APR guarantee.  We will gladly pay you $250 if we cannot beat the best deal you can find.

Veterans Beware of VA Streamline Sales Tricks

As a branch manager here at Low VA Rates, I constantly talk to Veteran or military homeowners who are skeptical about VA streamline offers they are getting in the mail, on the internet, over the phone and even some in their home from a live person.  In many cases, the information being given or received is legit, clear and straightforward.  Unfortunately, we do sometimes hear about information that is being shared from a loan officer, telemarketer, or another bank employee that is not completely true and at times, downright illegal!

I hope to be able to share today some tips or tricks for anyone looking to refinance a VA loan via the VA streamline loan program so that regardless of who you are using or intend to use, you can feel a bit better about what you are being told.  Here are the basic facts about a VA streamline loan that pretty much all marketing pieces you get or see will outline:

  • No appraisal (true by VA rules, but most lenders will require one.  Low VA Rates does NOT require one)
  • No credit score minimum (true by VA rules but almost always each bank/lender will want some sort of minimum) Low VA Rates is case by case and has approved below 550 FICO scores on a VA streamline.
  • No employment/income verification needed. (again true by VA) We will want to make sure you are employed or receive disability or SS or something.
  • We have been told Mortgage Investors Corporation or MIC regularly requires money out of pocket or upfront.  Again, this is allowed, but we do not see any need to do this.

Now here are some tricks or things to use to try and discover if someone is being deceptive or planning a bait and switch:

  • If the lender wants money upfront or out of pocket at the time of application. (VA does not require this and there is no reason for it) If you are being asked for money or a deposit up front, history has shown this is almost always a sign of bad things to come.
  • If the lender tells you they can close you in 5-7 days this is almost always to lure you in.  Can a streamline loan close that fast?  Yes, but normally speaking it is not possible.

The VA streamline loan is by far the most popular loan around today for Veterans and military homeowners.  You, of course, have to have a VA loan now to take advantage of this VA IRRRL or Interest Rate Reduction Refinance Loan.  Please apply on our site or give us a call if you have any questions.  We look forward to assisting you.

The VA Streamline in California

The (IRRRL) can Save Military Personnel Big Bucks Every Month

 

There are so many servicemen and women, and retired veterans who are struggling, financially, in our current economy. Many of them are trying to find ways that will help them pay their bills and put food on their tables every month. A program called the VA streamline will allow them to refinance their VA loans, with very little qualifying. It will help lessen their monthly financial struggles.


Why the VA streamline loan program?

The VA streamline in California loan program, which is also known as the Interest Rate Reduction Loan (IRRRL), is designed to help our military men and women, along with veterans, to refinance their VA loans easily and fast. This loan can usually reduce their monthly mortgage payments by hundreds of dollars if not more.

By refinancing, there will be more money for military personnel and their families each month. They will be able to afford the necessities that they need without financially struggling. It will just make life a whole lot easier.

Besides lowering the interest rate, the IRRL can be a useful tool to refinance an adjustable rate loan to a fixed one. It can also be used to get a 15-year loan, instead of having a 30-year loan.

Simple qualifications

Simple qualifications have been put in place so that almost any military personnel who applies will get approved. Basically, if you have a VA loan, a 600 or higher credit score, have not been 30 days late on your current VA loan in the past year and had your loan for at least ninety days, you will qualify. There are no prepayment penalties with the VA streamline in California IRRRL, no upfront fees and the cost of refinancing can be put back into the loan. The refinancing cost is lower than usual.

If you lost your job, you can still qualify

Even if you have lost your job, have no income, no savings, and no assets, have judgments, liens or if you are in collections for back monies owed, you can still be approved.

Take advantage of the low-interest rates

The VA streamline loan is a government-backed loan. Active duty men and women or veterans can be approved very fast and hassle free. With the interest rates at an almost low historical level, taking advantage of this loan would be a great way for them to have extra money in their pockets each month.

If previously tried to refinance, try again: New rules

The VA streamline in California IRRRL is the best loan on the market today. If any military personnel has tried previously to refinance and did not qualify, reapplying would be the thing to do. Some of the rules have been changed making it easier than before to refinance.

VA Streamline With No Appraisal

There are different kinds of loans that will enable a homeowner to lower their interest rate. By lowering their interest rate, they’ll also be able to lower their monthly payment. Veterans get a benefit that others don’t. That’s the VA streamline loan, also known as the Interest Rate Reduction Refinancing Loan. Best of all, it’s possible to get a VA streamline with no appraisal.

VA loan holders used to be able to refinance their homes with VA streamline loans very easily. Appraisals weren’t done and credit histories weren’t pulled. But that all changed when the housing market crashed. As the economy suffered, so did real estate. VA streamline loans were impossible to get if someone was upside down in their mortgage or who had a low FICO or credit score.

Effective April 18th of 2011, it’s entirely possible to get a VA streamline with no appraisal. So, what does that mean? It means that a person can easily qualify for one of these loans which could lower their interest rate by 1% or even more. Depending on what the house is valued at, a 1% decrease can mean hundreds of dollars in savings every month.

VA Streamline Loan Benefits

There are many reasons to get a VA streamline loan. There are many benefits, too. Let’s take a look at some of the main ones.

– No out of pocket money – closing costs and other fees can be rolled into the total amount that’s being refinanced

– Low-interest rates – Enjoy rates that are lower than what the rest of the American population can get because of being a veteran

– Locked in rates – It’s not a variable rate, which means you’re locked into the low rate no matter what

After serving your country, you deserve some great benefits as a Veteran. Being a veteran entitles you to the VA streamline loan. As long as your mortgage was done with a VA loan, you’ll meet the qualifications. Without having a home appraisal or credit check, means that you’re more likely to qualify for the loan.

A VA streamline loan with no appraisal is a best case scenario when deciding to refinance your home. Many companies offer low rates, but they aren’t as low as what you can get with a VA streamline. After all, they’re designed to reward veterans. Taking advantage of this kind of opportunity will ensure that you are rewarded with a great rate that surpasses what many people in America are getting. Plus, refinancing is a much better option of getting out of a tough financial situation than bankruptcy or foreclosure.

Getting a VA streamline is much easier since April 18th. Low VA rates are just a click away. You’ll be able to fill out the application and get a response quickly. When there’s no dependency on credit checks and appraisals, you’ll be able to get a response quicker than ever. You’ll then be able to start saving money once your rate goes down.

Common VA Streamline Questions

Common VA Streamline Questions:

 

 

What is the difference between a VA streamline vs. a normal refinance?

 

The difference between a VA streamline and other refinances has to do with the qualifications as well as the documents required to qualify. For a normal refinance, you must qualify for the loan and provide all of your income, banking, credit, and liability information as well as an appraisal. Typically the loan cost will be higher than a VA streamline refinance. The VA streamline is a very quick, affordable, and non-stressful process.

 

Historically interest rates on a VA loan have never been this low before.

With the way the market currently is, VA interest rates are at an all-time low.  With government funding and other factors, many people predict that lower rates not to last much longer.  Most investors think that it is wise to hedge the risk of rates going back up and take advantage of the refinance now.

How long does a VA streamline refinance take?

The VA streamline process normally only takes 3-4 weeks. This will vary slightly dependant on the conditions that the lenders ask us for and the cooperation of the borrower.

What is a VA streamline refinance loan?

VA streamline refinance is simply a mortgage refinance of an existing VA loan with a limited amount of documentation and qualifications thereby “streamlining” the loan process.

What does a VA streamline cost?

With the VA streamline, there is no out of pocket costs, meaning that the borrower doesn’t have to bring anything to the table at closing.  All of the costs associated with doing the loan are rolled back into the loan itself.  Making it much easier for the veteran to afford the refinance. It also makes it easier to pay off the house faster.

What are the other benefits of the VA streamline?

Besides being an easy and non-stressful process, the VA streamline allows the borrower to defer two payments after closing, and also replaces the escrow account refunding the old one to the borrower making it easier to pay off other debt that they might have.

Why Wait?

Now that you have a good idea what the VA Streamline is all about all that’s next is making the move! All you need to do is click the link below and we can get started on your refinance! Hurry, before rates go up!

How VA Loans Put Money in Your Pocket

Have you recently looked into your wallet and noticed there is less money in there? Not because your teenagers are cleaning you out but because the economy (and times in general) are just tougher. Because of this situation and the current market for homes and interest rates, it may be the time you have waited for to refinance, using the VA’s VA Streamline IRRRL loan. IRRRL stands for Interest Rate Reduction Refinance Loan. This is not a new program; the VA has offered it for years and years. Because interest rates are so low right now, many people are finally getting around to it and in some cases taking advantage of the program again from just a couple years ago.

Let’s look at the program.

The VA allows for current VA mortgage holders in good standing, those who have been current on their payments for 12 months, and those who have had the loan for less than 12 months can still qualify, just have to meet qualifications that include that the refinance is beneficial to the borrower.

Commonly having a second mortgage or home equity line of credit (HELOC) make the process more difficult but not necessarily impossible. You see because these liens are subordinate to the current first mortgage- the VA loan- the lien holder on the 2nd or HELOC has to agree to remain in a second lien position when the VA loan is refinanced. This is called subordination. Most companies agree to subordinate to the new VA first mortgage.

Ok so let’s continue to look at how the refinance can put cash in your pocket. As part of the refinance process the current VA loan servicer, the company that the payments are made to now, will be paid off. When that loan is paid off, the interest that is due on a payoff is included. So commonly, there are two months in which the veteran/homeowner will not have to make payments, they are simply deferred. That frees up two months worth of current house payments, in some cases like with larger loans that could free up $5000 or more.

Next, as part of that payoff to the current servicer, they are no longer able or required to pay out escrows, tax and insurance payments, on the loan. So they will return whatever is left in the escrow account when the higher refinanced loan is paid off. The new loan includes those prepaid taxes and insurance built into the loan so when the new payment comes due, there are already taxes and insurance built into the account for when they are due later that year.

So let me give you an example with actual numbers. I have a client where the current monthly payment on their 6.25% loan is $1956. They will not have to make that payment for the next two months since the interest is included in the payoff, so $1956 x 2= $3912. Then the escrows refund is $4623. So $3912 + $4623=$8535 cash in their pocket from the VA streamline rate reduction refinance.

You can see how easy it is to put money in your pocket from taking advantage of the VA refinance program. Oh yeah don’t forget this example above, not only are they putting $8535 in their pocket but they are also lowering their monthly payment by $276 a month

VA loans with Wells Fargo should be streamlined with Low VA Rates

Something that most military homeowners are not aware of is that brokers or mortgage companies that have access to wholesale rates sheets can get them a much lower rate than if they (Veteran) were to call Wells Fargo themselves.  This may not make a lot of sense on the surface but if you have ever shopped at Costco or Sam’s club then this example may help.

Wells Fargo VA Streamline Banner

Why can Costco sell you a bottle of shampoo cheaper than if you were to go directly to lets say Johnson and Johnson’s website and buy it directly from the supplier?  The answer is simple.  Costco has negotiated huge discounts due to the volume of shampoo they buy, due to the fact that they (Costco) spend money marketing and selling the shampoo and now this is money that Johnson and Johnson will not have to pay to move their product.

VA mortgage loans are very similar.  Wells Fargo of course has its own loan officers, branches and offices and is certainly willing to do their own loans through what is referred to as a “retail channel.”  A retail location is like the Wells Fargo bank on the corner or in the shopping plaza.  If you were to call Wells Fargo directly as a consumer you will work with their retail division and get great service and decent rates.  However, if you call Low VA Rates or any other broker that has access to Wells Fargo’s wholesale rates, you will get a much lower rate.

I am not a veteran and do not have a VA loan of course.  My entire mortgage profession has been spent working on VA loans and assisting military families with their home loans.  The other day Wells Fargo contacted me directly because I have a loan with them on a rental property of mine and they asked me if I wanted to refinance.  I will keep this story short, but the rep at Wells when I showed him what wholesale rates I could get on my own, simply told me he could not compete and I should do it myself.  Here is an excerpt from that email:

I understand……what you saying is that wholesale is at a price of 104.00 ( I assume they want to get paid) so they can give you 3 points….and we are at 101.00…..

My manager has been with Wells for 15 years and he says there is no way we can be 3 points away from wholesale, but you know what you’re doing and if you can get it I would jump on it too..

So for those of you with VA loans at Wells Fargo what does this mean to you?  I am not trying to suggest that Wells Fargo is ripping you off or that you should not refinance straight through the retail loan officer, but I do want to make you aware of your options and suggest seeing what Wells Fargo can do for you and then contacting Low VA Rates or another broker and see what they can do for you.

There has never been a better time than now to streamline your VA loan and take advantage of seriously low VA interest rates.   Low VA Rates is dedicated to assisting you with any VA home loan questions you may have.

Wells Fargo VA Streamline Banner

VA Loan Holders -Opportunity Knocks

I began doing VA streamline loans for military home owner in the fall of 1997.  At this time, I was attending college and simply wanted a part-time job that I can feel good about and it would also allow me to make a reasonable income.  A friend of mine, was working at a mortgage company that focused their efforts on veterans and a special type of loan for these military homeowners.  My first day of work I was given a sheet of paper full of phone numbers and was asked to start dialing as many veteran homeowners as possible.  Basically, at this time VA interest rates have recently come off of some of their highest levels in years and the mortgage industry was very under regulated and here I was at a company that was offering streamline refinances to almost anybody with a VA loan and a heart beat.

Fast forward now almost 15 years later and I am still doing home loans for nation’s finest; military homeowners.  Today however, our mortgage industry is being regulated to the extreme and banks are making it more and more difficult for those of you with VA loans to take advantage of these historic interest rates.  I am not passing all the blame onto banks.  As someone who has worked in the mortgage industry for the past 15 years I realize the industry needed overhaul, regulation, and change.  However, as is typical we have now seen a knee-jerk reaction and over correction making it very difficult for some of the most deserving borrowers to take advantage of these historically low interest rates.

Since my beginning in 1997 I have participated in 4 or 5 what we like to call “refi booms.”  A refi boom is a time where almost anyone with a loan is looking to refinance and almost everyone can benefit from that refinance.  The situation we currently have in front of us here in the United States is one that I would have bet my entire career against.  For years there have been home owners not taking advantage of low interest rates during our refi booms and their rationale or reasoning at that time was that they knew interest rates would go lower.  I thought they were all crazy and to be quite honest some even ignorant.

I had conversation after conversation with military families that told me they were not interested in saving $200 a month for one reason or the other.  As a loan officer nothing frustrated me more than hearing someone that did not think it was worth their time, some costs and some energy to save $200 or more a month, not to mention hundreds of thousands over the long haul.

Some of the most common reasons I would hear as to why a VA loan holder would not want to streamline refinance are:

  • The closing costs hurt my equity
  • I’m not saving enough
  • I think rates will go lower
  • I don’t want to start over on a new 30 year loan
  • and the list would go on an one

I am here today to tell you that if you are a veteran or military home owner and you have an interest rate at 4.75% fixed or higher or any type of adjustable rate or hybrid arm, THAT YOU NEED TO REFINANCE NOW!

You may be saying, “Eric you are admitting in this post that you were wrong before and that those that waited to refinance were right.”  THIS IS NOT WHAT I AM SAYING. Those families that refinanced along the way have saved way more money by taking advantage all the way along the drop.  It is the families that waited that may at this time be just S.O.L.

Those families that waited do not have access to the same easy VA streamline loans that they could have had years ago.  Just two years ago your home’s value (appraisal) was not needed, you did not have to have a FICO or credit score looked at, you did not have to be employed, and this list goes on and on.  So for the many families that waited, congratulations YOU WERE RIGHT, rates have gone lower, but for those same families that can NOT TAKE ADVANTAGE now I am sorry.

As a VA mortgage insider I am here to tell you at the rate that VA loans are changing, it is a matter of time and very little time until there are no longer VA streamline loans available.  I think this is a tragedy to our military, but it is the world we live in today.

Who cares if rates may be going even lower?  All of the reasons NOT TO DO A VA Streamline in the past are now gone.  Let’s revisit them:

  • The closing costs hurt my equity
  • I’m not saving enough
  • I think rates will go lower
  • I don’t want to start over on a new 30 year loan

The closing costs hurt my equity.

NO CLOSING COST VA LOANS are the majority of the loans we are doing now.  Seriously NO COST LOANS.  Do you really have any equity left anyway?

I’m not saving enough.

We are in what some tend to compare to the Great Depression #2 and if a couple hundred bucks a month is not worth it to you now, then it will never be.  I also want to remind you that when you do a VA streamline loan you get to postpone two mortgage payments and get a cash refund of your current escrow balance, thus putting immediate money in your pockets.

I think rates will go lower

You are just plane gambling and should mortgage your whole house and go to Vegas if you think this.  Suppose they do go lower, have you really lost by taking current rates that are the lowest they have been on record?

I don’t want to start over on a new 30 year loan

We have been offering 25 and 20 year loans at a pace never before seen.  Because rates have gone so low on VA loans, we see people taking a 25 or 20 year loan and still saving money each month!

Dear VA home owners, please for the love of whatever you cherish, contact us now and at least look into the VA streamline loan.  I seriously have never been a part of an opportunity like we see now and am very weary that it will ever come around again!

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