VA Loan Interest Rate Reduction Refinancing Rules
When a borrower applies for a VA home loan, he or she might not be anticipating a major life change such as a divorce, getting remarried, or getting married for the first time.
Over the lifetime of a VA insured mortgage the borrower’s status or needs may change, and when it comes time to apply for refinancing, the borrower may need to explore options on having a new spouse–or no spouse at all–as an “obligated party” on a VA Interest Rate Reduction Refinancing Loan.
Can the borrower add someone new when it’s time to apply for a VA IRRRL? What about the borrower who took out a VA mortgage with someone else but wants to refinance the loan all by themselves?
The VA Lender’s Handbook has a collection of rules which apply in these situations. For example, an unmarried vet with a VA loan may wish to add a spouse to the loan when it’s time to apply for the IRRRL. The Department of Veterans Affairs permits this.
It also allows a vet who purchased a home with a VA loan with a spouse to refinance alone after a divorce.
VA rules also permit the veteran to refinance with a different spouse. What’s not permitted? Situations where the spouse alone wishes to refinance. For example, if the veteran and spouse purchase the home with a VA loan and there is a divorce, the spouse alone cannot apply for a VA IRRRL.
This also applies in cases where the veteran had a joint VA loan with non-veterans.
Because VA loan benefits are intended for veterans, in most cases the non-veteran obligated on the loan cannot apply for VA refinancing without the veteran’s participation in the loan, even if the non-veteran owns the property or has assumed financial responsibility for it by themselves.