Everything You Should Know About VA IRRRL

    Are you a service member with questions about VA loans and refinances? JVM can provide you with more information on VA Interest Rate Reduction Refinance Loans (IRRRL) otherwise known as a VA “Earl” mortgage. Additionally referred to sometimes as a VA Streamline Refinance or IRRRL Loan. The VA “Earl” program is a part of the VA Home Loan Program that aids current members and veterans of the military.

    Any veteran or service member with full entitlement can buy a home with no down payment and no mortgage insurance, and get an interest rate that is typically much lower than current conventional rates – using a VA home loan The advantages of the VA mortgage and VA “Earl” mortgage don’t end with the close of escrow. If rates fall, the homebuyer can refinance easily to get a lower rate without no appraisal needed, usually resulting in a lower mortgage payment, using a VA Interest Rate Reduction Refinance Loan.

    How VA “Earl” Mortgages Work

    The VA “Earl” mortgage process is very similar to any other loan process. It begins with the veteran homebuyer providing proper documentation and filling out an application and disclosures.

    Next, the lender obtains the Certificate of Eligibility from the Veterans Administration. The underwriter then has to approve the application. Then the homebuyer will need to sign the loan documents to complete their loan.

    What is the Cost to Refinance a VA Mortgage?

    Like other mortgages, you must pay some closing costs, including escrow, title insurance, and underwriting fees. However, the homebuyer can choose to have the lender cover these costs in exchange for a slightly higher interest rate, though this is not exclusive to an “Earl” Mortgage.

    Like other VA loans, a VA funding fee must be paid unless the borrower has an exemption, however this funding fee can be rolled into the cost of the loan. Alternatively, this funding fee can be paid out of pocket upfront.

    Lastly, there is the options to pay discount points, or a rate buy down, resulting in a lower interest rate. There are limits however, with the maximum of two discount points being financed into the new loan amount.

    Any more than two points will need to be paid out of pocket. Discount points are an option and not required. We always recommend consulting with a mortgage expert like our Client Advisors to see if paying points makes financial sense.

    View mortgage rates for April 21, 2024

    How Much Can You Save?

    With a lower rate mortgage, veterans can expect to see lower monthly payments. Generally, if the new loan is at least 0.5% lower than the old one, the savings will be substantial.

    To get an approximation of the annual savings, multiply the loan balance by the difference in rate. For example, lowering the rate by ½% on a $500,000 loan could save approximately $2,500 a year in interest—close to $210 a month. Reducing the rate by a full 1% could provide an estimated $5,000 in savings each year over the life of the loan.

    Next Steps For VA “Earl” Mortgage Refinance

    If you are a veteran or active-duty military member, firstly, THANK YOU!

    All of us at JVM Lending are incredibly grateful to those who have served in the military and welcome the opportunity to help all veterans and active-duty service members take advantage of this exceptional mortgage program. At JVM we have no loan officers, meaning we can offer better service and lower rates to all our clients. Our Client Advisors are available 7 days a week for any questions by phone at (855) 855-4491 or by email at [email protected].

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