Marital Status Change – Streamline Refinance
If you currently have a VA Loan and are interested in refinancing, the VA has created a loan that makes the process easy and affordable for you. The Interest Rate Reduction Refinancing Loan (IRRRL) is designed to make refinancing simple – no extra paperwork is needed and there are no out-of-pocket expenses. The process is so simple that is has been nicknamed the VA Streamline Refinancing Loan. However, there are some provisions you should be aware of before you decide to refinance.
The IRRRL is called the Streamline Refinancing Loan because it does not require any new paperwork. The VA has all your information already on file, so there’s no need for another credit check, appraisal, etc. However, this is only true for loans that have all the original borrowers on the new loan.
If your status changes and you need to remove a borrower from the loan, you will be required to provide full documentation for the new loan. You will need to submit credit checks, income statements, etc. in order to be approved for the new loan. The documents you will have to provide will be the same type of documents you provided for the original loan.
Refinancing After Divorce
If you are planning to refinance after a divorce, you will need to first decide with your ex-spouse what the housing arrangement will be. If your ex, non-military spouse plans to keep the house, you might want to have them refinance with a conventional loan in their name. Even if they plan on making all the payments on the VA Loan, you will not be eligible for another VA Loan in your name. To reestablish your eligibility, the house will have to be paid off in full first with a conventional loan.
For veterans looking to refinance with an IRRRL who want to add a borrower, you will need to talk to your lender about what documents your co-borrower will need to provide. You may not be required to provide new financial documents, but your partner will most likely need to submit a credit check, income-to-debt ratio, etc. in order to be included on the loan.
In every situation, it’s important to remember that an IRRRL is designed solely to give you a better interest rate than the one you have now. This means you won’t be able to borrow cash from your home equity. If you need to take out money when you refinance you will want to look into obtaining a Cash-out Loan.
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