Other costs include a VA funding fee. The fee for an IRRRL is 0.5% of the value of the loan and, in the case of cash withdrawal repayments, the fee ranges from 2.3% to 3.6%. Some veterans with service-related disabilities, certain surviving spouses, and active-duty service members who have received a Purple Heart do not have the fee. For your refinance to be approved, you'll need to meet the eligibility requirements for a VA IRRRL, as well as your lender's credit, income, and financial standards.
Your savings are affected by the current VA rate, the new rate a lender could offer you to expedite refinancing, what you owe on your VA loan right now, closing costs, remaining mortgage years, and other factors. VA IRRRL refinances allow you to lower your rate and monthly payments with less paperwork and faster closings. However, the VA funding fee and its interest rate will be higher with a cash out refinance compared to a VA refinance loan with reduced interest rates (IRRRRL). The IRRRL program is regulated by the Department of Veterans Affairs (VA) and helps eligible veterans, military personnel, and surviving spouses refinance their VA mortgage at a lower rate.
VA IRRRL do not allow cash to be extracted from refinancing, except for a limited amount to improve energy efficiency. A simplified VA refinance loan, also known as an interest rate reduction refinance loan (IRRRRL), is a simplified refinancing program that can only be used to refinance an existing VA mortgage. Another important note from the IRRRL is that simplified VA refinancing only requires prior occupancy of the home.