The VA Interest Rate Reduction Refinance Loan (IRRRL) lowers your interest rate by refinancing your existing VA home loan. A lower interest rate may lower your monthly mortgage payment. You can also refinance an adjustable rate mortgage (ARM) into a fixed rate mortgage.
Facts About IRRRL
- No appraisal or credit underwriting package is required when applying for an IRRRL.
- An IRRRL may be done with no money out of pocket by including all costs in the new loan, or by creating the new loan with a higher interest rate to enable the lender to pay the costs.
- When refinancing from an existing VA ARM loan to a fixed rate loan, the interest rate may increase.
- Lenders are not required to give you an IRRRL, however, a VA lender may process your application for an IRRRL.
- Veterans are urged to contact several lenders because each lenders terms may vary.
- You cannot receive any cash from the loan proceeds.
An IRRRL can only be made to refinance a property on which you have already used your VA loan eligibility. It must be a VA to VA refinance, and it will re-use the entitlement you originally used. Here are some other factors:
- A Certificate of Eligibility (COE) is not required. Take the COE to the lender to show the prior use of your entitlement.
- Only existing VA loan may be paid from the proceeds of an IRRRL. If you have a second mortgage, the holder must agree to subordinate that lien so that your new VA loan will be a first mortgage.
- 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. For an IRRRL you need only certify that you previously occupied the home.