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VA IRRRL Facts

va loansBorrowers who apply for VA home loans are eligible to apply for a VA Interest Rate Reduction Refinancing Loan, or IRRRL, after they have made a minimum of six mortgage payments and meet other “seasoning” or minimum waiting period requirements on the original loan.

Any borrower applying for a VA IRRRL is affected by an important clause in the VA Lender’s Handbook, which states, “For all IRRRLs, the veteran must sign a statement acknowledging the effect of the refinancing loan on the veteran’s loan payments and interest rate.”

Why does the VA require borrowers to sign such a document?

Since no credit check or appraisal is required on many VA Interest Rate Reduction Refinancing Loans, the borrower’s application for the new loan carries with it some basic restrictions. The applicant can’t get cash back on the deal (that is reserved for VA cash-out refinancing loans which require a new credit check and other underwriting) and the new loan must result in a lower monthly payment and/or interest rate decrease.

These two rules have exceptions which can, should the borrower choose to take advantage of them, actually drive the monthly payments up or cause an increase in interest rates over the old loan.

A borrower who refinances from an adjustable rate mortgage may discover a higher interest rate on the new fixed-rate VA IRRRL. This can raise the amount of monthly payments and cost more over the lifetime of the loan. The security of having one interest rate instead of a fluctuation of rates and mortgage amounts due is a good trade off for those who need more financial stability, but the cost of the loan should not be overlooked even when the VA borrower is eager to get out from under an adjustable rate mortgage loan.

Where the monthly payment exception is concerned, the VA rules say, “The principal and interest payment on an IRRRL must be less than the principal and interest payment on the loan being refinanced” unless certain exceptions apply. Those exceptions include a situation where the IRRRL is refinancing an ARM, or where the term of the IRRRL is shorter than the term of the original loan.

These scenarios all by themselves can cause an increase in monthly mortgage payments, but the veteran may find even higher payments due if other financing expenses are included into the loan such as the financing of discount points, the VA funding fee or closing costs. If the borrower’s monthly mortgage payment increases by more than 20%, the lender must determine whether or not the borrower is a good risk for the added expense.

These are all reasons why the VA insists on its borrower signing statements of understanding about such issues. A VA loan applicant who is ignorant of these important details could find themselves in financial hot water; the VA wants to avoid such surprises which can ultimately be financially devastating for those unprepared for the amount of the new mortgage payments.

Always read the terms and conditions and ask plenty of questions before committing to the new loan. Find out how much you’ll be paying later as opposed to what you can afford to pay now.

Bruce Reichstein

About Bruce Reichstein

Bruce Reichstein is an Expert on (VA) Military/Veteran Home Loan Guidelines for over 26 years. He is an experienced VA Loan Mortgage Banker who is passionate about assisting US Military Veterans utilize their Veteran Eligibility to purchase a home.

29 Responses to VA IRRRL Facts

  1. Dan Naber says:

    I received a letter stating my VA Guaranteed loan through Wells Fargo had been targeted for inclusion in a VA IRRRL program. The contact number is 1-866-273-4285. It includes a note implying that this program is tied to the Economic Stimulus Program.

    Can you give me some information about this beginning it legitimacy?

    Thank you.

    Dan Naber

    • Joe Wallace says:

      Hi Dan, thanks for asking. There’s no way I could confirm or deny a specific program’s legitimacy. I will say that a VA IRRRL—an Interest Rate Refinancing Reduction Loan–is something the borrower initiates and not the other way around.

      You’d do well to contact the Department of Veterans Affairs directly via the Regional Loan Center that has jurisdiction in your area and your lender as well. Don’t throw away the letter as it may be needed to follow up. If the program is legitimate, the VA and your lender can give you advice about next steps. If it is NOT legitimate the VA and your loan officer can give you advice on how to file a complaint.

      • Debby says:

        I also got a letter with the same number on it and gave the guy my social security numbers. He said he wants to meet at my house to sign paperwork. Im feeling a little vulnerable.

        • Dave Owens says:

          Debby,

          You have opened yourself up to a lot of vulnerability. I’ve signed several Home loans, and not once did I sign one at a home. In fact every time I’ve signed one, it was at a bank or the lending institution. Also, you should not give your Social Security (or any other identifying numbers to anyone over the phone without properly vetting them. Just because someone sent you a letter doesn’t mean that they are who the letter says (or implies) they are. I would monitor my credit for a while to make sure that this person doesn’t use the information you gave them to do harm.

  2. Joe Wallace says:

    That sounds fairly aggressive to me, but not knowing any more than what you’ve told me the best advice I can offer is to call the VA directly and inform them of the situation and get some advice. You can find the phone number for the nearest VA Regional Loan Center here:

    http://www.benefits.va.gov/homeloans/rlcweb.asp

    I’d cancel the appointment (or simply don’t answer the door) until you get some advice from the Department of Veterans Affairs.

    • Joyce says:

      my husband received a letter this weekend stating the same thing, but with a different phone number 888-883-2797.

      I would also like additional information. It doesn’t seem quite right to me.

  3. Helen says:

    My husband also received the letter stating our VA loan with Wells Fargo had been tagged for inclusion in their VA IRRRL for a limited time! The number provided with completely different than both numbers listed so far! 1-888-423-0558.

  4. David Randolph says:

    I also received a letter stating that my VA loan with Bank of America was flagged for inclusion. The number they gave was 1888-278-5497. My monthly payment was calculated at 687.00 per month.

    • Wendy says:

      David I got the same letter and it had the same $$ amount. The phone # was 866-425-3919. I’m going to Wells Fargo to check on this before I do anything with it.

  5. Brian Dove says:

    I got a letter for Wells Fargo and I do not have a loan with them and I don’t have a VA loan. I paid off my VA loan with Wells Fargo 5 years ago.

  6. Jen says:

    I just received my letter from Wells Fargo a couple of weeks ago and is still very cautious about it. Do not think I will be calling. The number for me is 866-425-3919.

  7. Connie Barber says:

    We received the same letter except it said at the top Office of Veterans Assistance Eligibility Division. Said our loan included and the new payment would be $719.60. The phone number is 1-800-694-2490

    • Joe Wallace says:

      Have you contacted the VA about the letter? If it’s a scam they would be very interested in the details, I’m guessing. You can call the VA directly at 1-800-827-1000.

  8. angel l zapata says:

    I just received a letter about my mortgage with wells fargo,suggesting that i qualify for a low mortgage payment,but i will call d va first,another veterans, please do the same thing,

  9. Sunshine says:

    My husband got one of those letters today. Number listed same as above. 1-888-423-0558. It says Reinvestment Initiative, IRRRL-1003 Benefit Allotment, Forman 21-0760 Eligibility Notification. It shows our original lender who sold our mortgage to another lender (without our knowledge) several years ago. We were making our payments on time withboth lenders. The 2nd lender kept sending statements saying we didn’t pay our payment. Their explanation is that every persons payment goes in to a “pool”. It didn’t get credited to our account. Long story short, we just found out that our house has been foreclosed on and was sold TODAY to someone else. We have 10 days to pay mortgage. In full or be out of our house! My husband is a disabled vet. Our child is disabled & fighting a terminal illness & I have been deemed disabled by 8 Doctor’s. And fighting the state for disability. It’s a shame because we are older. Had a child real late in life, worked. Our butte off, served our country, then worked state jobs. Now we are treated like 2nd class citizens with no where to turn for help.

    • Joe Wallace says:

      I strongly encourage you to contact the Department of Veterans Affairs immediately to discuss this before paying or signing any paperwork–but don’t delay. Contact the VA directly at 1-800-827-1000 to discuss this situation as soon as possible.

  10. Roy says:

    I did the IRRRL on a property I owned and reduced the rate from 6% to 4.5%. Can I use this benefit more than once to reduce my rates further?

  11. Gabe says:

    I recently signed my refinance paperwork using the VA IRRRL process. One of our concerns were occupancy requirement because we might be transferring soon.

    According to the VA: “The occupancy requirement for an IRRRL is different from other VA loans. When you originally got your VA loan, you certified that you occupied or intended to occupy the home. For an IRRRL you need only certify that you previously occupied it.”

    During the refinance paperwork we were told to sign that we were not planning to “move in the near future.”

    Can the lender apply this restriction to a IRRRL? And what is the “near future.”

    • Joe Wallace says:

      Terms and conditions specified by the lender may vary–please contact the VA directly for assistance for any terms of your loan paperwork you don’t understand. As for “near future”, it would be impossible for us to speculate what that lender intended with the language in your loan agreement.

  12. Erica says:

    Hi! We refinanced our VA loan in 2009 using the IRRRL to a rate of 5%. Can we use that benefit again?

  13. Gina says:

    I received a letter from Wells Fargo about the IRRRL Program with toll free number 866-411-1898 ext 5273 Christoher Kiblin. I’m not sure what to do or should I even follow up on this. I would like some guidance. Is this a good or bad thing?

    • Joe Wallace says:

      I would contact the financial institution directly at a main company number (not the number listed in the ad) and inquire about the offer. Or call the VA directly at 1-800 827-1000.

  14. Lisa Martin says:

    Hello. My situation is like everyone else, my husband relieved a letter saying that they were compelled to notify us that our mortgage with Crescent Mortgage which was bought by Wells Fargo, has been tagged for inclusion in the VA IRRRL program. Then it gives a mortgage and statement number which they claim is ours and it’s not they also advise to call the department within the next 5 business days from receipt if the notice. I haven’t called yet because I’m very skeptical but we would love to lower our payment if this wasn’t a scam. If you could shed some light on this we would really appreciate it. Thank you for looking out of all of our heros. God bless you.

    • Joe Wallace says:

      The VA IRRRL program is something any VA borrower can apply for–you don’t need to wait to be “included”. Borrowers should beware of third-party notifications and contact a lender for assistance with a VA refinance loan either in person, or by the financial institution’s official site, or by using the main contact number listed for your local branch or loan officer instead of calling a phone number given to you by a third party. Additionally, VA IRRRLs can be applied for at any time, there is no expiration date on your ability to apply for a VA IRRRL.

  15. Lenore Glover says:

    We got the same notice, which stated that “The economic stimulus program will end soon. There is currently no plan to extend the stimulus program”. Thank goodness I read your statement that there is no expiration date on your ability to apply for a VA IRRRL. Thank you so much!!!

  16. HENRY HUIZAR says:

    I received a letter advising me that my bank Peoples Bank has been tagged for inclusion in the VA IRRRL program. I am not in a IRRRL program currently and I am currently going into a refi of my house with another bank. I did call the number given and left my name and number but after reading about all the problems associated with IRRRL, I am hesitate to proceed further. The fact that I called their number to get information does not obligate me in entering this program does it? Please let me know. If it does I will not sign any document. Please let me know won’t you

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