First of all, I love this loan program. I think the loan people who sit around in Washington DC who come up with mortgage loan policy hit the grand slam with this program. It is too bad that this program isn’t available to all folks who have mortgages – but that would remove the benefit that Vets for their service to our great country.
So for now, I’ll stick to talking about the VA streamline mortgage and saying thanks to the Vets who have given their service and who are currently giving their service.
Now, let’s get on with the matter at hand – giving you information about the VA Streamline mortgage program. One caveat: loan programs and guidelines change quite often, especially since the mortgage meltdown in 2008 – so the information I’m giving you here is given to you in the context of it being: general. For more specifics, you will need to speak directly to a VA loan officer about your options.
For starters, the VA Streamline mortgage program has another name – a government program name: the IRRRL – the Interest Rate Reduction Refinancing Loan. If you look around the net, you will find a lot of information about this wonderful loan program.
The program design is based on the idea that if the person who has a VA mortgage wants to refinance their mortgage to a lower rate and they are already paying their mortgage as agreed with no problems then it would be expected that with a lower interest rate (and a lower payment) the loan borrower would continue to make payments on their mortgage.
As such, the VA streamline can go in two directions: an easy path – one that requires very little documentation, and a harder path – one that requires more documentation.
The easy route happens if you are truly lowering your interest rate and monthly payment on your existing VA mortgage using the IRRRL.
The hard route happens if your payment goes up by more than 20% and are refinancing using the IRRRL program to:
- refinance a VA ARM,
- refinance to a shorter loan term (ie. going from a 30 year term to a 15 year term), and
- adding the cost of energy improvements into your loan balance.
For the easy route you basically just need to have a clean mortgage history with no late payments on your mortgage for the past 12 months and your refinance must reduce your monthly payment and interest rate on your VA mortgage.
For the hard route, you will basically need to provide some income and tax information to ensure that you can afford the higher payments.
Now back to my original caveat…if you start shopping around you will most likely get some variations to these simple loan guidelines. Don’t be alarmed, what we’re seeing in the field is that individual lenders and investors who offer VA mortgage are starting to add their own guidelines to protect themselves from defaulting mortgages. You may have to get an appraisal, or you may have to provide more income documentation than normal, or you may only be able borrow up to 90% of your home’s value versus 100% like the program allows.
Well, that is all I have for you in this post. I will end it by saying thanks again to all of the Vets and their families who have served, are serving and who will serve our great country in the future.
Equal Housing Opportunity