The VA streamline refinance is reserved for veterans with a current VA loan. If you fall into that category and are ready to refinance, it’s time to find a lender. You don’t have to use your current VA lender; you are free to use any VA-approved lender that provides you with the best rate and terms. So how do you find the right lender?
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Look for Lenders With Experience
It’s okay to interview a lender and ask questions about their experience with the VA program. You have just as much at stake as the bank does, so ask your questions before you commit. You want to work with lenders thatunderstand the VA IRRRL process. The more experience a lender has, the more willing they will be to accept your request at face value, only requiring you to prove your mortgage payment history and net tangible benefit.
If you work with a lender without a lot of experience in VA streamline refinance loans, you might find yourself verifying your income, assets, credit score, and home value. This would defeat the purpose of the VA streamline refinance. Shopping around to find a lender with minimal requirements and plenty of experience will generally give you the best results.
Ask About Closing Costs and Rates
As you shop around with different lenders, you’ll want to compare the costs and interest rates the lenders quote. You probably won’t find two loans that are exactly the same, so make sure you pay close attention. Look at the combination of closing costs and rates. Pay even closer attention to the APR as this is the actual interest rate you’ll pay after paying the fees and interest on the loan over its lifetime.
Don’t get caught up in the lenders that offer ‘no closing cost loans.’ This may sound appealing, but there’s a catch. you’ll pay a higher interest rate. Is it worth it? You won’t know until you compare it to a loan with a regular interest rate and you paying closing costs.
Take your time as you shop around. Ask as many questions as you have and discuss the various options so that you choose the loan that suits you the most.
Assess Their Customer Service
Remember, the lender that funds your loan might also service it. If they don’t find out who will service your loan. You have to deal with this company for the next 15 to 30 years if you keep the loan, so make sure it’s a company you are okay with their customer service.
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You can read reviews online or talk to past customers to see how a company operates. When you apply for the loan, you’ll deal with a loan officer – this isn’t who you will deal with once you have the loan. Ask questions about the loan servicing, who you will talk to and what capabilities they have online. You’ll be glad you asked these questions before you take a new loan as the loan servicingcould make or break your loan experience.
Finding the Right VA Streamline Refinance Lender
You can start with your current VA lender if you are happy with their service and want to see what they have to offer, but we recommend shopping around as well. Check out lenders online, in your local area, and even mortgage brokers. See what each lender requires and what type of rates/costs they have to offer you. Be as honest as you can with each lender regarding your situation so they can give you a good idea of what to expect.
Loan officers know what their bank will and will not accept. If they know the bank requires a credit pull or they like to verify income, they will tell you upfront. This will help you decide if the program is right for you or if you should keep looking for programs elsewhere.
FAQ:
Does the VA control the rates VA lenders provide?
No, the VA doesn’t control the interest rates. The market determines the rates and then lenders adjust the rates accordingly. For example, borrowers with a low credit score or a late mortgage payment in the last twelve months will likely get a higher rate quote than a borrower with great credit and an on-time payment history.
Do all lenders require veterans to go through the credit check with the IRRRL program?
No, not all lenders will pull your credit. It depends on the lender’s requirements. Again, shopping around will give you the best idea of the programs available. You may find that there are more lenders that do pull credit than don’t, but if you have a credit issue, just keep looking, as there are lenders out there that won’t pull your credit.
What closing costs do lenders charge on the IRRRL?
The closing costs lenders can charge are limited by the VA. In general, they can charge you a 1% origination fee and 2% discount points. The VA also charges you a 0.5% funding fee. Beyond that, the closing costs are very limited and should be pretty similar between lenders.
Do all VA lenders offer a 15-year term?
No, you may have to shop around to find willing lenders to give you a 15-year term. The 30-year term is the most common option, especially if you have little to no equity in the home. The VA does guarantee 15-year terms, though, so finding a willing lender could work to your advantage.
How do lenders provide a no closing cost loan?
The no closing cost loan sounds like a great deal, but you still pay the fees, just in a different way. When a lender doesn’t’ charge closing costs, they increase your interest rate. In other words, rather than collecting the money at the closing, they get it little by little when you pay the higher interest rates. Sometimes you end up paying more this way, especially if you take a 30-year term because you pay that higher interest rate for 30 years.
Find out if you are eligible for a VA loan.