If you are a veteran that already established VA loan eligibility, chances are more than likely that you also have VA Streamline Loan eligibility. There are certain circumstances that might prevent you from being able to refinance, but a majority of veterans are able to take advantage of the lucrative program that enables them to save even more money every month.
The General Requirements
If you thought the standard VA loan contained very flexible guidelines, you will love the VA Streamline loan guidelines, as they are even more flexible! The guidelines for the VA Streamline include:
– Timely mortgage payments over the last 12 months; the VA will not allow more than one 30-day late payment in that time in order to be eligible
– The new payment must be lower than the existing VA payment, which is fairly easy to do since the name of the program is the IRRRL or Interest Rate Reduction Refinance Loan
– Prove previous occupancy of the property
– Prove use of your entitlement on the current VA loan
Those are the only requirements! You do not need to verify your income, employment, assets, or even your credit. The lender is able to use the fact that you qualified for the VA loan in the first place as reason enough to qualify you for the loan as long as you meet the above requirements.
The Payment History
The payment history on your VA loan is the largest determining factor in your VA Streamline Loan eligibility. The VA and its subsequent lenders use the housing history as a judgment of your credit and/or debt ratio. If your housing payments are on time, then you can afford the payments you have. Since the payments moving forward will be lower than your current payments, the VA and the lender can confidently offer you a new loan.
If you have late payments, however, a new lender will have a hard time writing a new loan for you. Even though the payments will be lower, you might not have your head above water just yet, which could put the new lender in jeopardy. If you do have more than one 30-day late payment in the last 12 months, it is to your benefit to start making those payments on time and waiting until you have a 12-month period with no more than one late payment.
Credit and Home Value do not Matter
The best news about the VA IRRRL program is that your credit score and home value do not matter. In today’s economy, this can be great news. People that lost a great deal of value in their home and/or those that suffered negative credit histories as a result of a job loss or income downsizing can still refinance. Since the idea behind the VA IRRRL program is to make the payments more affordable, it is a win-win situation for everyone involved. The payments become more affordable for you, which enables you to do a few things:
– Make your payments on time to build your credit back up
– Gain more equity back in your home as the value builds and your principal decreases
The lower payment also gives the VA and the lender more confidence that you will get the payments made on time. This means that the VA has to bail out fewer banks and the banks continue to make money on the interest you pay.
Entitlement and VA Streamline Loan Eligibility
You probably remember having to prove your VA entitlement when you first took out your current VA loan. Some lenders check for entitlement automatically with an online program while others require you to prove your entitlement. Whatever the case may be, you do not have to do that again. Your entitlement automatically rolls over for the refinance, giving you VA Streamline Loan eligibility automatically. You do not have to use any remaining entitlement; you reuse the entitlement you already used.
The VA Streamline process is extremely simple and a great way to save money. Because there is very little to verify, the process can be completed rather quickly. As soon as the lender confirms your timely housing history and used entitlement on the original VA loan, the process can move faster. Before you know it, you could have a loan with a lower interest rate and payment, saving you a significant amount of money every month.