A Guide to VA Streamline Mortgages

VA Streamline Mortgages creates a true “no out of pocket cost” method of refinancing a current Veteran Administration home loan for those who qualify. In a time of declining interest rates, VA Streamline Mortgages are a low-cost, no-hassle refinance alternative. 

What Are VA Loans?

In 1944, Congress passed the Servicemen’s Readjustment Act - also known as the GI Bill of Rights - to ease the transition of returning veterans into life in the United States. Among the benefits of the GI Bill were home loans partially guaranteed by the government that featured lower costs and less stringent qualifying requirements than traditional home loans. With some modifications, the VA Loan program has continued. To be eligible to participate in the program, the borrower must:

  • Be a veteran of the active duty armed forces and must not have a dishonorable discharge;
  • Have served for 90 days in war time or 181 consecutive days in peace;
  • Served two years if enlisted after Sept. 7, 1980 or commissioned and begun service after Oct. 16, 1981.

There are special requirements for surviving spouses of veterans and for National Guard members or reservists.

VA Loans are issued through private lenders such as banks with the U.S. Department of Veteran Affairs guaranteeing a portion of the loan value or $104,250. The borrower must live in the property. There is no down payment required for a VA Loan as the 25 percent federal government guarantee fills that need for the lender.

VA Streamline Refinance

A VA Loan can be refinanced by the original borrower under the Interest Rate Refinancing Loan program, also called VA Streamline Refinance, which are the VA Streamline Mortgages. This program allows VA borrowers to take advantage of declining interest rates with a loan that retains many of the benefits of the initial VA Loan.

For example, there is no down payment required and any fees associated with the loan can be rolled into the loan amount. VA Streamline Mortgages can truly be a “no out of pocket cost” refinance loan.

Understanding Refinancing

To know if a VA Streamline Refinance loan is for you, it is important to understand how refinancing works. If you have a typical 30-year, fixed rate mortgage or an adjustable rate mortgage that rises to a given rate after an introductory period, but interest rates have begun to decline, it can make sense to refinance. Typically, rates need to have declined so that you can recoup the cost of taking out the new loan through lower payments before the end of the loan term.

VA Streamline Benefits

There are many more benefits to refinancing with VA Streamline Mortgages. There is also a reduced amount of paper work, such as no new appraisal is required, no certificate of eligibility is required, and there is no credit report required.

Additionally, there is no private mortgage insurance on VA Streamline Mortgages, which is a requirement for mortgage loans greater than 80 percent of a home’s market value and which can add significantly to your monthly costs.

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