Home loans can be difficult to understand and as a veteran you are entitled to specialty loans that have been created to help in purchasing a home. Newer terms like “VA Streamline Refinance” can seem a little daunting and difficult to understand. We hope to clear the confusion and not only help you understand what a VA Streamline Refinance Loan is but the situations in which it is used and how it can apply to you and your relationship status.
What is a VA Streamline Refinance Loan?
A VA streamline refinance loan is also referred to as an Interest Rate Reduction Refinancing Loan or an IRRRL. These loans were created for veterans to help them secure the lowest interest rates available through their VA eligibility. These VA streamline rates offer veterans the opportunity to keep their VA acquired homes in several different situations.
What Situations Are These Loans Used For?
The most common situations where a VA streamline refinance loans is used is when a veteran changes their relationship status. In cases of marriage, divorce or re-marriage, a VA streamline refinance loan can be a valuable tool in the loan and refinancing process. With each change in relationship status or need for co-borrowers there are certain qualifications, guidelines and factors that will need to be considered to receive a VA streamline refinance loan.
VA IRRRL loan and Your Relationship Status
VA loans differ from FHA home loans but the streamline process for both loans can make life simpler for the home owner and loan recipient. When veterans want to refinance through a VA IRRRL loan, it is important that the entire group of recipients listed on the original loan are named in the new VA loan application. With all the recipients and previous applicants listed on a loan, the refinance process is streamlined as there is no need for a credit check and less paperwork to be filled out. No credit check is necessary for the streamlined refinancing loan because the original borrowers have been listed and previously approved by the Department of Veterans Affairs.
Guidelines to Remove a Borrower with a VA Streamline Refinance Loan
Removing a borrower from a VA Interest Rate Reduction Refinancing Loan will change the entire loan and require the same paperwork needed as a new loan. This means the refinance would require another new credit check as well as a debt to income ratio check. To remove a borrower and receive a new VA loan, veterans will need to apply for a full documentation VA loan.
If, however, you need to remove a borrower due to a divorce, a VA refinance can be streamlined through an ex-spouse arrangement. If your previous spouse has won the home in the divorce or you are letting them stay and retain ownership on the home, it is important to have them refinance the home into their own name through a conventional refinancing loan. If they are also a veteran they should refinance the home with their VA benefits which shall remove your VA claim on the home and reinstate you with VA benefits to be used on another home, should you so wish. If your non-military ex-spouse does receive a refinance through a conventional loan solely in their name, as a veteran, your benefits and eligibility will be restored once the property has been paid off in full (which happens when your ex takes out the new conventional refinanced loan) and you meet the VA’s other home loan eligibility requirements.
Guidelines to Add a Borrower with a VA Streamline Refinance Loan
While the guidelines to remove a borrower from a loan can be difficult, adding one to a VA loan in cases of marriage or remarriage can be fairly easy. Through applying for a VA streamline refinance loan, veterans can add a spouse to their VA IRRRL. The new borrower may need to undergo credit checks and other loan requirements but once they have passed those checks, a simple VA streamline refinance loan allows them to become a part of the status of the loan and owners of the VA loan and home.
Using a VA Streamline Refinance Loan in Conjunction with Your Relationship Status
Home loans can be difficult to understand but it is our hope that this post has helped you understand what a VA Streamline Refinance Loan is, the situations in which it is used and how it can apply to you and your relationship status. If you have further questions, comments or concerns, we are happy to help.