What is a VA IRRRL?

The VA Loan’s Secret Weapon: The VA IRRRL

If you’re exploring the world of VA loans, you’ve probably heard about their incredible benefits. But did you know there’s a hidden gem within the VA loan program? Allow me to introduce you to the VA Interest Rate Reduction Refinance Loan, affectionately known as the IRRRL (pronounced like your favorite uncle Earl).

You might wonder why you should choose a VA loan, especially if conventional loan rates and terms seem comparable at the time of purchase. Well, that’s where the IRRRL comes into play, and it’s nothing short of amazing.

The IRRRL Magic: Reducing Your Rate with Ease

Picture this: you’ve been in your home for a while, and interest rates have dropped significantly. With a VA loan, if you can reduce your interest rate by at least half a percent and you’ve made 210 days’ worth of payments, you can take advantage of this refinance.

Here’s what makes it so incredible:

1. No Appraisal:

Unlike conventional loans that require an appraisal to ensure there’s enough equity in your home, the IRRRL doesn’t. So even if your home’s value has fluctuated, it won’t affect your ability to refinance.

2. No Income Verification: 

Conventional refinances often involve income verification. With the IRRRL, you won’t need to provide income documentation, making the process much smoother.

3. No Equity Requirements: 

As mentioned earlier, there are no equity requirements. Whether you owe more on your home than its appraised value or you’ve barely built up any equity, the IRRRL has your back.

4. Minimal Credit Checks: 

While your credit score will be checked to ensure you’ve been making your payments, there are essentially no credit score requirements. This is in contrast to conventional loans, which often demand a high credit score.

The Armageddon Button for Active Duty

For active-duty personnel and veterans who transition out of the military, the IRRRL is like an Armageddon button for your mortgage. Imagine losing your job or facing financial challenges a few years after purchasing your home. If interest rates drop, you can still refinance with ease under the VA program. With a conventional loan, this could be difficult to do.

The Great Recession Scenario

Remember the Great Recession when home values plummeted? If you found yourself owing more than your home was worth, refinancing with a conventional loan would have been nearly impossible due to the appraisal requirement. However, with a VA loan and the IRRRL, it’s a different story altogether.

Why the IRRRL is the VA Loan’s Secret Weapon

In a scenario where all factors seem equal at the time of purchase, it’s the IRRRL that pushes the VA loan over the edge. The ability to streamline your refinance without the hassles of appraisals, income verification, and high credit score requirements makes it a game-changer.

At WeVett, where military clients are our main focus, we keep a keen eye on these refinancing opportunities. Expect a call from us around six to seven months after your closing date, where we’ll discuss your options. Whether it’s to reassure you that you’ve locked in a great rate or to help you save a few hundred bucks each month, the IRRRL can make it happen.

One Important Caveat

The IRRRL is not a cash-out option. If you’re looking to pull cash out of your home, you’ll need to VA cash-out refinance, which does require an appraisal and more documentation.

The IRRRL is a powerful tool in the arsenal of benefits offered by VA loans. It’s designed to simplify the refinancing process and ensure that you have the opportunity to save money each month with minimal hassle. So, if you’re a military-member considering a VA loan, remember that the IRRRL might just be your secret weapon.