You save money and lower your interest rate. IRRRL loans are much easier and faster to take out than conventional mortgage loans. You can transfer all of your closing costs to the VA IRRRL loan. Another advantage of the IRRRL is that Virginia mortgage holders don't have to pay financing fees or closing costs in advance.
These can be included in the loan balance and paid monthly. Disabled veterans and their spouses may also qualify for an exemption from the funding fee. Usually, you'll need to pay a funding fee with a VA IRRRL, but you should know that the fee represents only 0.5% of the loan balance, compared to 2.15-3.5% for normal VA refinances (with a cash out option). For example, if your current mortgage rate is 6% and the current VA mortgage rates are 4%, then yes, you can lower your rate by refinancing with an IRRRL.
In addition, there is no limit to the number of times a qualified borrower can use the VA's IRRRL program, so if rates drop even further in the coming years, you can always use this program again, Fagley explains. If you've already made six consecutive monthly payments on your current VA loan, you can probably refinance with an IRRRL. Because of its simplicity, your VA IRRRL could close in about a month, especially if you meet all of the program's eligibility guidelines. Veterans and active military personnel may be eligible for the IRRRL program, which allows VA loan holders to refinance at a lower interest rate or a lower monthly payment.
You'll need to apply for an IRRRL through a bank, credit union or mortgage company, rather than through the VA. If you want to save money by setting a lower interest rate, but don't plan to withdraw equity from your home, the VA IRRRL program may be your best option.