An IRRRL can be done “out of pocket” by including all costs in the new loan. Some lenders may say that the VA requires certain closing costs to be charged and included in the loan. The only cost required by the VA is a funding fee* of ½ percent of the amount of the new loan. Although the process is simpler, like all loans, simplifications of the VA usually entail closing costs.
The closing costs of the VA IRRRL usually represent between 1% and 3% of the total amount of the loan, but may vary depending on the lender and other factors. If all goes well, a VA IRRRL could close in less than a month, which is faster than most refinances. Your lender may charge you an opening fee for this service, and this is one of the main costs of closing a VA IRRRL account. The VA IRRRL allows veterans and service members to refinance their current mortgage loan at a lower rate and monthly payment.
All VA loans require a VA funding fee, which helps offset the costs of providing these mortgages without the need for a down payment or monthly mortgage insurance.