If you’re one of the fortunate that has VA home loan eligibility, here’s both a “congratulations” as well as a “thank you.” Congratulations for being eligible for the best zero down home loan in the marketplace and thank you for your service to this country. Even though there is no down payment required for the VA home loan to buy and finance a home, there are closing costs the veteran is simply not allowed to pay. Other low down payment loans require a monthly mortgage insurance payment yet VA loans require no such monthly payment and still have competitive mortgage rates.
Documenting a VA loan is also very similar to any other mortgage type with the exception of obtaining the certificate of eligibility, or COE. This certificate is obtained directly from the VA and is the only document VA lenders use to determine whether or not the borrower is indeed VA eligible. Other than that, VA loan borrowers provide their most recent pay check stubs, bank statements and W2 forms. A credit report is pulled and credit scores reviewed. Borrowers pay for a property appraisal that will help establish the property value. The approval process for a VA loan generally takes less than 30 days. That is unless the borrowers are refinancing from an existing VA loan and into a lower rate VA loan.
A “VA to VA” refinance is referred to as an Interest Rate Refinance Reduction Loan, or IRRRL. VA lenders also refer to this process as a streamline refinance primarily due to ease of approving the IRRRL loan. As long as the borrowers are refinancing to a lower rate or getting out of an adjustable rate mortgage into a fixed rate loan and aren’t taking any cash out during the transaction. What’s so special about a VA IRRRL loan? It can be closed in a matter of days, not weeks. In fact, the loan can be closed in 10 days which is also the shortest period lenders are allowed to close a loan.
The VA IRRRL does not require employment or income verification. This means there is no need for pay check stubs and no need for W2 forms. If you provided your income tax returns when you first obtained your VA loan, you won’t need to provide them this time around. There is no credit check or minimum credit scores required as well. No appraisal is necessary as value is not an issue with the VA streamline refinance loan. No income, no credit and no appraisal needed. That’s why getting an IRRRL loan is not only easy but lenders like them as well for that very reason. They close quickly and easily and are still government-backed just like the original VA loan.
As long as there is no more than one 30-day late payment within the last 12 months and no such late payments within the past six, the loan is eligible. And the certificate of eligibility? Your lender takes care of that issue for you as well. If you currently have a VA loan and are thinking of refinancing, it’s time to talk to your loan officer about your options, including the VA IRRRL program.