The San Diego VA Streamline Loan or VA Interest Rate Reduction Refinance Loan (IRRRL) allows borrowers to lower their interest rate by refinancing their existing San Diego VA home loan.
In order to use the San Diego VA streamline, the loan being refinanced must be a VA loan. The Veteran can also refinance an adjustable rate mortgage (ARM) into a fixed rate mortgage.
A veteran cannot use a VA Streamline to refinance a conventional loan, but they can use a regular San Diego VA Loan to refinance a conventional loan. In that case it will be a full documentation loan.
The occupancy requirement for VA Streamline is different from other VA loans. You can use a VA streamline refinance on a home that is currently being used as a rental as long as you can certify that you previously occupied the home.
What is a San Diego VA Streamline Loan
The San Diego VA streamline loan has fewer verification requirements than a standard loan. It does not require us to verify income, therefore debt to income ratios are not an issue. All we need to do is verify employment. As long as one of the original borrowers on the loan is employed, then we have satisfied the requirement.
The VA does not require appraisals on San Diego VA streamline loans, but individual lenders may. Usually, if the new VA streamline loan will be refinanced with the same lender that is currently servicing your loan or a related lender, they will not require an appraisal. There are also lenders who will not require an appraisal as long as the loan amount is below 125% of the market value.
Since we are San Diego Mortgage Brokers, we are set up with many lenders increasing your chances of not needing an appraisal. We also have several lenders who offer the 125% option.
In addition, many lenders do have minimum credit scores required for San Diego VA Streamline loans. Some require a 620 FICO, others a 640.
Additional Requirements of San Diego VA Streamline Loans
If the original VA mortgage has a fixed interest rate, then the VA streamline loan must either have a lower interest rate or a shorter repayment period. The new VA streamline loan may have a higher fixed interest rate if the original San Diego VA mortgage was an adjustable rate mortgage.
If the payments on the VA streamline refinance are 20 percent higher than the payments on the current mortgage, the underwriter will want to make sure that the veteran can afford to make the payments by requesting income documentation.
No mortgage other than the current VA loan may be paid from the proceeds of the streamline refinance. If the veteran has a second mortgage, the second must agree to subordinate so the new VA streamline loan will be a first mortgage.
San Diego VA Streamline Closing Costs and Loan Amounts
The closing costs of the San Diego VA streamline refinance can be added to the loan so the veteran does not have to pay cash at closing. The balance of the new VA streamline loan must be the same or less than the balance on the original VA loan plus closing costs, pre-paid interest, taxes, insurance, and a maximum of two discount points.
The new mortgage amount can also include the .5% funding fee that VA streamlines require plus up to $6,000 for weatherization and other modifications that conserve energy. You may not receive any cash back from the loan proceeds at the time of closing.
As a San Diego Mortgage Broker, there are many times that we can pay all the closing costs on your behalf, so they do not need to be added to the loan amount. Feel free to contact me at 858-829-7186, if you would like to see if this would be an option for you.
There are no loan limits for San Diego VA Streamline refinances, but some lenders have maximum loan amounts that they will offer. In addition, loan amounts above $417,000 will carry a higher interest rate than loan amounts below.
San Diego VA Streamline Funding Fee
VA Streamline refinances require a half percent funding fee based on the loan amount. This reduces the loan’s cost to taxpayers since VA loans have no monthly mortgage insurance. As mentioned above, the VA funding fee can be added to the loan or the veteran can pay it in cash. A veteran does not have to pay the funding fee if they fall into one of the following 5 categories:
- Veterans currently receiving service-connected disability income
- Veterans who were in receipt of disability compensation or who received military retirement compensation instead of disability compensation but are now receiving active-duty pay due to re-enlistment or being recalled to active duty
- Veterans receiving pension in lieu of service-connected disability income
- Veterans who previously received service-connected disability income
- Un-remarried surviving spouses of veterans who died as the result of service-connected injuries
Qualification of a Spouse for A San Diego VA Streamline
A veteran’s current spouse qualifies for a VA streamline refinance loan. A widow/widower of a veteran also qualifies if they signed the original mortgage along with their spouse. If the veteran gets divorced, their ex does not qualify for a VA streamline loan even if they own a home with an existing VA mortgage. If a veteran marries after their service, the new spouse can also apply for a VA streamline loan in San Diego.
If you are interested in getting your own quote, please click HERE or feel free to give me a call at 858-829-7186. I am a San Diego Mortgage Broker who works locally and has over 12 years experience. I look forward to helping you secure the best San Diego mortgage rate on your VA Streamline Loan.