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VA Streamline Refinance: Easiest Refinance Possible

If you are a veteran, on active military duty, or a reservist, a VA streamline refinance may be your ticket to the easiest refinance program available. Don’t think about the often long, intensive process you went through to purchase your home originally. Because streamline programs mean refinances options with minimum documentation, they care often much easier and quicker than traditional refinances. Most of the tough parts of completing a traditional refinance are completely removed because of the VA streamline loan program.

Most Americans interested in refinancing their homes run into issues relating to one of the two following issues. 1) Either they don’t qualify because of a change in job or reduction in income (especially in this economy), or 2) their homes will not appraise. Also the situation is compounded because many of the loan products that were used to purchase the home during the housing bubble, are no longer available due to lenders tightening up their requirements. These issues are typical of a refinance on conventional loan products.

However, assuming you already have a VA loan, many lenders will a streamline refinance, as opposed to a traditional refinance. As a borrower, this should be music to your ears. Why? Because the requirements are much less strict.

In fact, through a VA streamline, you can refinance your home without:

  • Any out of pocket costs
  • No appraisal
  • No job verification
  • No income documentation

This means you can leave your wallet at home for closings as you will not have to pay out of pocket closing costs. Of course there are still closing costs to complete the loan, but these costs can be rolled back into the loan.

You also do not need to waste money on an appraisal on your home. These appraisals can be as much as $600.00 that typically you have to pay up front. Not to mention with the housing market in a slump, many homeowners can not get their home to appraise for what they owe on the home.

The VA won’t require verification of employment or income documentation either. Thats right, leave those pay stubs and W2s at home. This is also especially convenient if you are self employed as it is often difficult to prove your income.

What a fantastic VA benefit that could save you tens of thousands of dollars in interest over the lifetime of your loan.

The VA Funding Fee Revealed

The VA requires a VA funding fee as a way of passing on the benefits of the VA loan to other veteran borrowers. Unless the veteran has a disability rating of 10% or more through the VA, they will be charged a VA funding fee when considering a VA loan. The amount of the fee varies depending of several conditions. These conditions include:

  • Whether your a purchasing, refinancing, or cashing out some equity
  • Whether your are regular military or Reserves/National Guard
  • Whether this is your first time utilizing your VA home loan benefits or its a subsequent use

Purchase And Construction Loans
Type of Veteran Down Payment First Time Use Subsequent Use for loans from 1/1/04 to 9/30/2011
Regular Military None 5% or more (up to 10%) 10% or more 2.15%
1.50%
1.25%		 3.3%*
1.50%
1.25%
Reserves/National Guard None 5% or more (up to 10%) 10% or more 2.4%
1.75%
1.5%		 3.3%*
1.750%
1.5%

Cash-Out Refinancing Loans
Type of Veteran Percentage for First Time Use Percentage for Subsequent Use
Regular Military 2.15% 3.3% *
Reserves/National Guard 2.4% 3.3% *
* The higher subsequent use fee does not apply to these types of loans if the veteran’s only prior use of entitlement was for a manufactured home loan.

Cash-Out Refinancing Loans
Type of Veteran Percentage for Either Type of Veteran Whether First Time or Subsequent Use
Interest Rate Reduction Refinancing Loans .50%
Manufactured Home Loans 1.00%
Loan Assumptions .50%

The VA Funding Fee Chart can be located on the Department of Veteran Affairs website.

VA Streamline IRRRL Fees Explained

VA Streamline (IRRRL) Fees Explained

Often times a mortgage transaction can be quite confusing when it comes to all the different fees that appear on a Good Faith Estimate. It is your right as a borrower to know what each fee means so that unallowable fees are not charged to you. Closing Costs which are normally associated with an Interest Rate Reduction Refinance Loan (IRRRL) are:

  • Origination Fee*
  • Discount Points
  • Prepaid Taxes and Hazard Insurance Reserves
  • Title Examination Fee
  • Title Insurance Fee
  • Flood Zone Determination
  • Environmental Endorsements
  • Recording Fees
  • Special Mailing Fees (Example: FedEx or Courier Fees)
  • VA Funding Fee

*The origination fee is limited to 1% of the loan amount and is known as the charge which goes directly to the lender or broker to facilitate a VA streamline refinance from start to finish. The lender or broker may charge this flat fee (origination) OR itemize the following fees not to exceed 1%:

  • Application or Processing Fees
  • Document Preparation Fee
  • Loan Closing or Settlement Fee
  • Notary Fees
  • Interest Rate Lock-in Fee
  • Tax Service Fee
  • Reconveyance Fees
  • Commitment or Marketing Fees
  • Trustee’s Fees or Charges

Please note that if ANY of these other itemized fees listed here are charged to you the borrower the origination fee cannot exist.