A reader asks, "I currently have a VA loan on our home we purchased in 2010. We also have an older home that we lived in for years that was not a VA loan as I did not realize I could get a VA loan for it. I have a 30% VA disability and I am wanting to retire from my work this year."
"I had always hoped I could take the roughly $60 to $80K equity in the older home and re-amortize our current home such that my mortgage payment would be easier to deal with in retirement years"
"In my searching through the Internet, I have discovered that I apparently cannot re-amortize my VA Loan. Our monthly payment is close to $2200 and I would like to get that down so that I can retire. What can I do if I can’t re-amortize?"
Borrowers who have existing VA home loans who want to reduce their mortgage payment and/or interest rates should explore their options with a VA Interest Rate Reduction Refinance Loan or VA IRRRL.
The VA IRRRL is specifically designed to reduce payments and/or interest rates. In fact, these reductions are a required part of the VA IRRRL in most cases, except under certain circumstances such as when the borrower is refinancing from an Adjustable Rate Mortgage or is adding energy-efficient enhancements to the home as part of the new loan.
The VA IRRRL is for existing VA loans and not for conventional mortgages. It can be used to refinance fixed-rate mortgages, ARM loans, hybrid ARMS, etc.
You can apply for a VA IRRRL as a streamline refinance loan, which means in many circumstances no credit qualifying is needed and no appraisal is required. The lender is free in both cases to require these, but the basic VA loan program for IRRRLs does not make such requirements.
VA IRRRLs do not permit cash back to the borrower. Those who want home equity type loans or cash back at closing time need to explore the VA cash-out refinance loan option, which requires both a new credit application and an appraisal.
Do you have questions about VA home loans or refinance loans? Ask us in the comments section.
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