Many veterans who have used their VA Home Loan benefit to purchase their homes have also refinanced with an Interest Rate Reduction Refinance Loan (IRRRL). An IRRRL is a refinancing program that is offered by the VA for veterans who want to refinance their current loans to get a better interest rate on their mortgage.

Some interesting facts that you should know about the VA IRRRL are:

• An IRRRL is used to refinance an existing VA loan with a new VA loan that usually has a lower interest rate.
• An IRRRL can be a fixed rate loan, an adjustable rate loan, or a hybrid adjustable rate loan.
• An IRRRL must be at a lower interest rate than your previous mortgage loan unless you are refinancing from an adjustable rate mortgage loan. This is because the interest rate with a fixed rate loan may be the same or slightly higher than your current interest rate with your adjustable rate mortgage loan, but once the rate begins to adjust it may increase. Therefore you should refinance an adjustable rate mortgage before the interest rate starts to increase.
• The monthly payment for an IRRRL must be lower than the previous loans monthly payment unless you are refinancing an adjustable rate mortgage or the new loan term is a shorter amount of time than the old loan term, like 20 years instead of 30 years.
• For most IRRRLs the VA does not find it necessary to get an appraisal, credit information, or underwriting. Your VA approved lender may require these things, and if they do the costs can be financed into the new loan.
• The lender can usually close an IRRRL automatically, so it is not a complicated loan process like taking your original mortgage loan.
• If the loan that is being refinanced is over 30 days past due then the VA must approve the refinance so it can not be submitted automatically by the lender.
• If thee loan that is being refinanced is more than 30 days past due then the late payments and charges to bring the old loan current can be financed into the new loan. The costs that are involved if the lender has already begun foreclosure can also be refinanced into the loan as long as they are reasonable.
• Energy efficient improvements are allowed to be refinanced into the IRRRL. This means that if you want to purchase a more efficient furnace, put in new windows, re-insulate, or make any other home improvement that will save you money on utility bills in the future, then you can use the equity in your home and pay for these improvements with your IRRRL.
• There may be an increase in your monthly mortgage payment amount if you finance energy efficient home improvements, finance your closing costs, include the funding fees in the loan, finance points, or get a higher interest rate when moving from an adjustable rate to a fixed rate mortgage.
• Only as much as two points can be financed into the IRRRL at closing. A point is equal to 1% of the loan, and if you take more points on the loan then you can lower your interest rate.
• You can not take cash out with an IRRRL. You can finance home improvements for the purpose of saving money in the long run, but that money is paid back to you as a reimbursement after the work is completed and it must be within 90 days of the loan closing. You do not get cash out of your home with this refinance loan.
• If your monthly payment will increase by more than 20% due to home improvements, fees, closing costs, a shorter loan term, or other factors then the VA does require credit information and underwriting.

For more information on the VA IRRRL program go to www.va.gov