If you’ve had your VA home loan for a while and are interested in reducing your monthly mortgage payment by refinancing, you have two options! 

1. Reduce the interest rate with a VA streamline refinance – an interest rate reduction refinance loan (VA IRRRL) 
2. VA cash-out refinance

What exactly do those mean? 

VA IRRRL

A VA streamline refinance is best if you already have a VA mortgage, you’re hoping to get a lower interest rate to save money, and you don’t want to take cash out from your home equity. 

For this type of refinance, you do not have to use the home as your primary residence, you just have to be able to prove that you previously lived in the home. 

To get an IRRRL, you need to find a lender, determine your entitlements, and follow your lender’s process for closing the loan and paying the closing costs. 

With an IRRRL, you have the option to include the closing costs in the new loan so you don’t have to pay the cash up front. 

Interesting facts about the IRRRL is that no documentation of income is needed nor is a credit report! VA guidelines only mention reviewing the VA mortgage payment history over the last year. 

VA Backed Cash-Out Refinance

A VA backed cash-out refinance loan allows you to replace your current VA loan with a new one under different terms. 

This type of refinance can give you the same benefits as an IRRRL, but you must live in the home you’re refinancing and you can’t roll the closing costs into your new loan. You must pay the closing costs upfront. 

A VA-backed cash out can help you take cash out of your home equity to pay off other debts, school loans, make improvements on your home, or even refinance a non-VA loan into a VA-backed loan. 

For a VA cash out, lenders will look at your credit score and the process is very similar to the process for a regular VA home loan. 

Refinance Costs

When thinking about refinancing your VA loan, it’s important to keep the closing costs in mind. Those costs can add up quickly and you need to ensure the benefits of refinancing outweigh the overall closing costs. 

Your WeVett loan specialist can help with that! 

Refinancing a VA loan comes with the same fees as other home loan refinances, except for the VA funding fee. 

The VA funding fee on an IRRRL is 0.5% of the loan amount.

The VA funding fee on a VA cash-out refinance is 2.3% of the total loan on your first VA home loan, and 3.6% on subsequent loans.