You want to refinance your VA loan just to save money. You know that interest rates fell and you want to take advantage of them. You would be a good candidate for the VA IRRRL (Interest Rate Reduction Refinance Loan). This program uses a streamlined process to get you from application to closing, but just how long does it take?
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While there isn’t a one-size-fits-all answer to this question because it depends on the lender, we can help you understand how to speed things along.
The VA’s Guidelines
First, you should understand the VA’s basic guidelines. They set these guidelines that every lender must follow for the VA IRRRL:
- You must have a timely mortgage payment history. This means that your last 12 mortgage payments must have been made on time. The VA does allow a one-time exception for one 30-day late payment during that time, but it’s up to lender discretion. If you’ve had your mortgage for less than 12 months, all payments must be on time.
- You must have a net tangible benefit. The VA wants to make sure that it makes sense for you to refinance. Because each loan has closing costs, the VA wants to protect you from spending unnecessary money on a loan that doesn’t benefit you.
This is all that the VA requires – it’s quite simple, isn’t it?
It is, but your closing timeline depends on the lender.
The Lender’s Timeline
Each lender works at a different pace. As you shop around for a loan, you want to ask not only about the interest rates/closing costs, but also on how long it will take to close your loan.
Lenders have different closing times because of their workload and their requirements. The VA guidelines we stated above are the VA’s rules. Each lender can add onto these rules if they wish. This means they could make it harder for you to qualify for the loan.
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For example, if a lender still wants to verify your income, it will take them more time to evaluate your documentation. They may also ask for more documents to prove your income. If they see any red flags, they may ask questions, call your employer, or ask for a Letter of Explanation. Each of these things takes time.
The lender’s workload at the time that you apply also plays a role. Certain times of the year are busier than others, especially when interest rates drop. You should know the lender’s workload and their estimate for when you may close.
How you can Manage the Timeline
You also play a role in how long your loan takes to close. Underwriters usually have questions or concerns that only you can answer. Sometimes they need more documentation from you, especially if you choose a lender that has overlays. The longer that you take to get the documentation to them, the longer it takes to close your loan.
If you want to speed up the process, you should know upfront what a lender needs from you. For example, if you choose a lender that wants to see your latest paystub or your last two months’ of bank statements; turn them in with your application. This way the lender has everything they need to process your loan and get it to closing.
Technically, the VA IRRRL shouldn’t take very long to get to the closing because of its light requirements. It’s up to you to choose the lender with the fastest turnaround as well as to respond to the lender’s requests right away. If you do that, you should be able to get your streamline loan closed quickly.
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