VA IRRRL Refinance is Popular in Orange County

VA IRRRL in orange countyThe VA IRRRL program, also known as the VA Interest Rate Reduction Refinance Loan, or VA Streamline refinance, is very popular as we start 2015. With interest rates hitting two year lows at the beginning of the year Orange County VA borrowers are able to take advantage of the rate drop by utilizing the IRRRL program. The IRRRL is the easiest type of refinance a homeowner will ever go through, which is why many VA borrowers may refinance more than once if interest rates continue to drop.

FAQ’s for the VA IRRRL Program

Q: Who is Eligible for a VA IRRRL?  Anyone that currently has a VA loan is able to refinance using the IRRRL program if they are lowering their interest rate and payment. While there are a few rules and guidelines, generally whoever is currently on the VA loan must also be on the new VA loan.

Q: How difficult is the loan process? The loan process is extremely easy, especially when compared to the loan processing involved in initially getting a loan to buy a home. With the IRRRL program there is no income documentation and no appraisal. The lender will most likely need to verify that at least one of the borrowers has a job, but income is not verified. No tax returns, paystubs, etc. A credit report is run, but primarily just for the mortgage rating and FICO score. A borrower’s FICO score will have some bearing on the interest rate of the new loan, but some lenders will allow FICO scores as low as 580, while some may make an exception for FICO scores lower than 580.

Q: How much does it cost to do an IRRRL? It depends. Many lenders will offer “No Cost” options, where a lender credit is used to cover the closing costs. It is even possible to get enough lender credit to cover the new impound account. But it is also possible to choose a lower interest rate and have closing costs added into the new loan amount. It is important to carefully review each of these options and make sure you are choosing the best IRRRL loan scenario based on your long and short term financial goals. For example, if you think you may move from your home within the next few years, then it would probably make more sense to go with a No Cost scenario, where the breakeven is immediate, versus a scenario with closing costs where the breakeven could be several years out. A good VA IRRRL Lender should be able to prepare loan scenarios and a Side by Side Total Cost Analysis to make sure you see the pro’s and con’s of each option.

Q: How long does it take to close an IRRRL? This depends on the lender. It also depends on how quickly the borrower sends the initial signed paperwork back to the lender. The typical time period to close a VA IRRRL is less than three weeks.

Q What happens to the impound account/escrow account on my current VA loan? After the IRRRL refinance closes your old lender will refund the balance of your impound account back to you. Normally they will send a check that should be received within 30 days of the closing. It is important to realize that as part of the new loan a new impound account for taxes and insurance is set up. The borrower has the option of bringing in money for the new impound account or financing the new impound account into the loan. Either way, they will be receiving a refund of the old impound account after closing, which will act as a reimbursement of the impound account they just set up.

How Do I Know if Interest Rates are Low Enough to do an IRRRL?

You will probably know it’s worth some investigation into the IRRRL program if you are receiving an influx of advertisements in the mail. And of course if the media begins talking about a drop in interest rates then it may be worth a look. Many of the advertisements sent in the mail can be very deceptive, offering extremely low interest rates that may or may not be available, and at a huge cost. For the lenders advertising in this manner it can work if it just generates a phone call. But working with a lender that pulls in VA IRRRL phone calls in this manner is not where your rate shopping should end, because not all lenders are the same.  It is important to talk to a local Orange County VA loan specialist who can prepare a custom Side by Side Total Cost Analysis, which will give a thorough breakdown of several IRRRL scenarios compared to your current loan. Going through this type of Analysis can save you thousands of dollars by helping you to make sure you are choosing the right loan scenario.

Authored by Tim Storm, an Orange County VA Loan Officer specializing in VA Loans.  MLO 223456 – Please contact my office at the Emery Financial. Direct line at 949-640-3102. www.OrangeCountyVALoans.com. I will prepare custom VA IRRRL loan scenarios which will be matched up to your financial goals, both long and short term. I also prepare a Video Explanation of your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.

Why VA Loan Refinancing in Orange County is Popular

VArefinanceAs we begin 2015 a wave of VA refinance activity in Orange County, CA that started in the last quarter of 2014 is continuing. There are several different types of VA refinances and different reason for each type of refinance.

Different Types of VA Refinance Loans

  • VA IRRRL – also known as the VA Interest Rate Reduction Refinance Loan, or VA Streamline Refinance. This program is strictly for someone who already has a VA loan and is looking to lower their interest rate and payment. The VA loan program has been widely utilized in Orange County over the past few years as a great way to buy a home with no down payment. With a drop in interest rates many VA borrowers are finding that the VA IRRRL program is an easy way to lower their payment. Most lenders do not require an appraisal for this program. There is no income documentation, no termite inspection. It is a very “streamlined” program where most lenders can even use a lender credit to cover all closing costs and prepaid expenses. It doesn’t take much of a drop in interest rates for this program to be utilized.
  • VA Cash out Refinance – when a current VA borrower wishes to pull some equity out of their home then the IRRRL program is not an option. The loan is then a “cash out refinance”. A full appraisal is needed, along with a clear termite report. This is a fully qualifying loan. But for those who are planning to use the cash to consolidate other debts or improve their home a VA cash out refinance is a great option. VA allows the borrower to pull cash out up to 100% of the appraised value. VA is the only type of loan program that allows for 100% cash out financing, making this a very popular loan option.
  • Non VA to VA Refinance – You don’t have to have a VA loan to refinance into a VA loan. (you do for the IRRRL program, but not for a non-IRRRL). For someone with a Conventional or FHA loan who wants to either refinance to lower their rate and payment, or refinance to pull cash out for home improvements and debt consolidation, the VA program can be an excellent option. Conventional financing can get expensive when the loan to value is higher than 80%. For an Orange County homeowner with less than 20% equity who wants to avoid paying mortgage insurance, the VA program offers a great solution. VA does not have monthly mortgage insurance and tends to have very aggressive 30 year fixed interest rates. And of course, it is the only way to actually pull cash out up to 100% of the properties value. Plus, once in the VA loan you will be eligible for a VA IRRRL if rates go lower, which is the easiest way to lower your interest rate (for those who are eligible.)

Important Things to Know When Refinancing into a VA Loan

There are some things that are different about the VA program compared to other types of financing. For one, the borrower needs to be an eligible Veteran. The lender can help retrieve the Certificate of Eligibility from VA. Also, below are things to know about the VA program.

  • The VA loan limit in Orange County for 100% financing is $625,500 (2015 loan limit). This means it is possible to refinance a VA loan up to $625,500 at 100% loan to value. For those who already have a VA loan, they can take advantage of the VA IRRRL program even if their current VA loan is above that limit. The VA loan limit does vary from county to county, so its important to talk with an experienced VA loan specialist who can make sure you are calculating your loan amount correctly.
  • The VA Jumbo loan is a great option for loan amounts above the 100% loan limit of $625,500. Some lenders will fund VA loans as high as $1,500,000. Some equity is required when going above the 100% loan limit, but not much, especially when compared to other types of financing.
  • A clear termite report is required for non-IRRRL VA refinances. Section 1 items on the report will need to be signed off, and quite often Section 2 items will also need to be cleared.
  • The VA Funding Fee for IRRRL’s is .5% of the loan amount (unless the Veteran has a disability waiver). The VA Funding Fee for non-IRRRL refinances will range from 2.15% to 3.3%, depending on whether the VA borrower has used their VA eligibility for a VA loan previously. The Certificate of Eligibility from VA will determine what the Funding Fee percentage will be. In some cases the lender may be able to offer an option where a lender credit can offset the VA Funding Fee.
  • It can take less than 30 days to close a VA refinance, provided the VA borrower quickly forwards the requested loan documentation to the lender.

The first step in determining whether it makes sense to refinance into a VA loan or take advantage of the VA IRRRL program is to talk with a local Orange County VA loan specialist. The VA loan officer should be able to provide several custom VA loan scenarios, along with a Video explanation of the loan options. Working with a lender who makes sure you are making an educated decision based on your long and short term financial goals is extremely important, since your home will be one of the biggest financial purchases you will make.

Authored by Tim Storm, a California Mortgage Loan Officer MLO 223456 – Please contact my office at the Emery Financial. Direct line at 949-640-3102. www.OrangeCountyVALoans.com. I prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short term. I also prepare a Video Explanation of your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.

Orange County, CA VA Streamline Refinance

VA IRRRL in orange countyOrange County, CA VA borrowers can take advantage of the VA Streamline Refinance program, also known as the IRRRL, or Interest Rate Reduction Refinance Loan. With rates still low in 2018, borrowers have been lowering their payments without needing an appraisal or even needing to qualify for the loan.

How Does the IRRRL Help Orange County, CA VA Borrowers?

The IRRRL was created to help those who have served our country be able to finance their homes at the best terms possible. With this program there is none of the following.

  • No Appraisal
  • No termite inspection
  • No credit qualifying

The loan must be current with no more than 1 30 day late within the most recent 12 months. This program is available to Veterans who purchased their home with a VA mortgage or refinanced into a VA loan at some point. There is more than one way to do a VA Streamline Refinance. You can either go for the lowest rate possible and add closing costs into your loan amount, an option that may make sense when you are planning to stay in your home long term. The other option is to go for an interest rate that would allow for the lender to cover some or all closing costs on your behalf. The best idea is to review all options and decide which scenario works best for your individual situation.

Rates are Low. Should I Definitely do a VA Streamline Refinance?

Just because the rate you can get with a VA Streamline is lower than your current rate doesn’t mean it refinance to va loanautomatically makes sense to refinance. You need to look at the monthly savings a refinance will create and make sure the costs involved in the streamline refinance do not outway the savings. For example, if you’re being told it will cost more than 3 points to get that great, low, advertised rate, the costs may end up being too high that they defeat the whole purpose of refinancing. Also, when a lender tells you that you will “skip” a payment or two, understand that you never “skip” mortgage payment. VA does not allow lenders to advertise “skipping” payment, and yet many VA IRRRL mailers still advertise it. What is actually happening if you feel like you are skipping a payment is that the interest for the payments not being made is added to the new loan. This may be something some VA borrowers want to do, but it is important to understand all of your options. Make sure that the lender you are working with has your best interests in mind.

Authored by Tim Storm, an Orange County VA Loan Officer specializing in VA Loans. MLO 223456. – Please contact my office at the Home Point Financial. My direct line is 949-640-3102. www.OrangeCountyVALoans.com. I will prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short term. I also prepare a Video Explanation of the your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.