VA Home Loan Q/A: Streamline Refinances

homes in a row

1. Question:

I read your article on Military.com. I purchased my home April of last year with my VA loan.  I have been getting a lot of phone calls and mail regarding streamlining the VA loan.  I am not sure if I should do it.

Answer:

When you close your loan it becomes public record that you have a VA Guaranteed Loan. Loan Companies will target you through mailings attempting to get you to refinance. I personally get at least 2 mailings a month that looks like it is coming from the government but in fact is from  a loan company trying to get me to do a Streamline Refinance.

When deciding on refinancing it is important to determine what your current interest rate is versus where interest rates are today. The general rule of thumb is that if you can refinance and reduce your interest rate by 1% then it is something worth considering. However, there are other factors such as closing costs and how long you plan on living in the property. The best approach to use is to get a good faith estimate from a lender to see what you’re anticipated monthly savings would be compared to your closing costs and then make the determination. You should determine how long your pay-back rate is when you refinance. For example, if closing costs are $3,000 to refinance and you can save $200 a month then you make your money back in 15 months. If you plan on living in the property beyond 15 months then it probably makes sense to refinance in this scenario.

2. Question:

How can I verify the availability of a VA loan? I'm in the process of buying a new home and need to validate whether I've used VA before or not.  I don't think I have, but would like to confirm.

Answer:

Your lender should be able to help determine your entitlement usage. If not you can go to www.ebenifits.va.gov and register for access, and request your Certificate of Eligibility. The VA will notify you if there is a problem with your request due to previously used entitlements.

3. Question:

What is a VA Streamline? And does it adversely affect an active VA loan?

Answer:

A VA Streamline is also known as Interest Rate Reduction Refinance Loan (IRRL). This is a refinance that enables you to refinance your VA Loan to a lower rate.

An IRRRL may be done with "no money out of pocket" by including all costs in the new loan or by making the new loan at an interest rate high enough to enable the lender to pay the costs.

The occupancy requirement for an IRRRL is different from other VA loans.  When you originally got your VA loan, you certified that you occupied or intended to occupy the home.  For an IRRRL you need only certify that you previously occupied it.
The loan may not exceed the sum of the outstanding balance on the existing VA loan, plus allowable fees and closing costs, including funding fee and up to 2 discount points.  You may also add up to $6,000 of energy efficiency improvements into the loan.

4. Question:

I did a short sale a year ago and am wondering when I could do another loan?

Answer:

There is a 2 year wait period from the date of the sale and transferred to the new owner. There is however no waiting period if you (the borrower) had no late payments on any mortgages and consumer debts within the 12 month period preceding the short sale AND they are not taking advantage of declining market conditions.

5. Question:

Can I do another VA Home Loan if I already have one but it is paid off?

Answer:

Yes you can but will have to request that your eligibility be reinstated. You can request a reinstatement by going to https://vip.vba.va.gov and register for access and apply for a restoration of your VA Home Loan Entitlement.

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