How to Close a VA Refinance Loan

By DB Jenkins

The Department of Veterans Affairs (VA) offers low-interest loans to veterans of the U.S. Armed Services. If you already have an existing VA loan, refinancing it is actually relatively simple. The process is called Streamlining. As opposed to traditional, private refinancing, VA Streamlining allows for a simple and efficient process by which veterans can lower their interest rates.

Understand that VA loans are not made directly through the Federal Government -- rather they are financed by government-approved private lenders. Streamline loans, called IRRRLs (Interest Rate Reduction Refinancing Loan), usually do not require an appraisal or credit check. However, private lenders may require this.

Make sure the reason for the refinance is strictly for interest rate reduction. You cannot pull cash out or consolidate any debts with an IRRRL. If you want to do either of these, you'll need to go through a standard underwriting process with a private lender (full appraisal, credit check, income verification).

Research different VA lenders. See Resources for a list of government-approved lenders for VA IRRRL loans. Look for lenders in your geographic area so you can meet your lender face-to-face.

Apply to at least three different lenders. This will ensure several options. It will also weed out the potential lenders who will require a full appraisal and credit check. Make sure to review all options side-by-side to realize the benefits of each.

Choose an lender and a loan option. Once you've decided on a program and lender, closing the loan should take no more than a week. This is much faster than traditional underwriting.

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