Want to refinance?
Streamline it!
Congratulations!
You get the best deal in the mortgage
business!
Streamline
Refinancing for VA Mortgages - (IRRL)
You
can reduce your interest rate without
having to re-qualify, and
there are no out of pocket expenses.
VA
has permitted streamline refinances
on insured mortgages since the early
1980's. The streamline refers to the
amount of documentation and underwriting
that needs to be performed by the mortgage
company, and does not mean that there
are no costs involved in the transaction.
The
basic requirements of a streamline refinance
are:
- The
mortgage to be refinanced must already
be VA insured.
- The
mortgage to be refinanced should
be current (not delinquent).
- The
refinance is to result in a lowering
of the borrower's monthly principal
and interest payments.
- No
cash may be taken out on mortgages
refinanced using the streamline
refinance process.
Companies
may offer streamline refinances in several
ways. Some companies offer "no cost"
refinances (actually, no out-of-pocket
expenses to the borrower) by charging
a higher rate of interest on the new
loan than if the borrower financed or
paid the closing costs in cash. From
this premium, the company pays any closing
costs that are incurred on the transaction.
Companies
may offer streamline refinances and
include the closing costs into the new
mortgage amount. This can only be done
if there is sufficient equity in the
property, as determined by an appraisal.
Streamline refinances can also be done
without appraisals, but the new loan
amount cannot exceed what is currently
owed, i.e., closing costs may not be
added to the new mortgage with those
costs either paid in cash or through
the premium rate as described above.
Investment properties (properties in
which the borrower does not reside in
as his or her principal residence) may
only be refinanced without an appraisal
and, thus, closing costs may not be
included in the new mortgage amount.
Generally,
it is best to go with the option that
offers the lowest cost, rather than
the lowest rate.
