VA Streamline IRRRL Program: Minimum Credit Scores?

If you are searching for more information on the VA Streamline / VA IRRRL refinance programs and confused about all of the different information you see regarding minimum credit score requirements — don’t worry, many people are.

It can be confusing.

The reason that it can be confusing is because  VA doesn’t actually have a minimum credit score requirement for the VA streamline refinance program — but many lenders do.

The most common credit score requirement from lenders right now is 620, but some have lower and some have higher minimum credit score requirements.

If you are working with a particular lender who says that they have minimum credit score requirements and you don’t currently meet those requirements, don’t worry — just keep shopping for a lender who has a lower credit score requirement or even better — doesn’t have a minimum credit score requirement for VA streamline refinances.

They are out there – and if someone tells you that they can’t help you with your VA streamline, be sure to ask them if they are aware of any lenders who are currently doing VA streamlines without requiring a minimum credit score — I know of at least one lender who still allows a VA streamline with no credit score.

The VA streamline minimum credit score requirements are also always changing – so what you hear today, may not apply tomorrow – it is a moving target!

VA Streamline Refinance Now Requires 620 Credit Score

VA Streamline Refinance: 620 Credit Score Now Required By Virtually All Lenders

For some time, there has not been a minimum credit score requirement for VA streamline refinance loans. This week, it was announced by the last major lender that now they are requiring a minimum of a 620 credit score on all VA streamline refinance loans. TB&W made the announcement that they were moving their minimum credit score requirement for all FHA streamline mortgage refinance and all VA streamline refinance loans to 620.

Details Of The Announcement

FHA Streamlines (credit and non-credit qualifying) and VA IRRRL’s with Credit Scores below 620 must be LOCKED prior to July 13, 2009 AND must CLOSE (Note Date) no later than September 15, 2009, and must be delivered to TBW within 10 days after closing Loans in this category locked on and after July 13, 2009 will require a minimum FICO of 620.

Clients will be required to obtain a 3 Repository credit report and utilize the standard method of determining qualifying FICO. Any Conventional, FHA (including Streamline Refinance), or VA (including IRRRL) loan that exceeds $417,000 with a Credit Scores below 660 must be LOCKED prior to July 13, 2009 AND must CLOSE (Note Date) no later than September 15, 2009, and must be delivered to TBW within 10 days after closing Loans in this category locked on and after July 13, 2009 will require a minimum FICO of 660.

Clients will be required to obtain a 3 Repository credit report and utilize the standard method of determining qualifying FICO. In addition, any previously announced minimum Credit Score requirements that TB&W has put into place, that did not have a specified Closing date, will be required to be LOCKED prior to July 13, 2009 AND must CLOSE (Note Date) no later than September 15, 2009, and must be delivered within 10 days after closing. Therefore, any loan, regardless of whether it may be locked, registered or approved, that has a qualifying credit score below 620 (with the exception of those loans that have specified higher FICO requirements) must CLOSE (Note Date) no later than September 15, 2009.

TB&W will continue to allow non-traditional credit for those borrowers with no useable credit for the loan programs that allow the use of such credit in accordance with published guidelines. TB&W is fully aware that these limitations may result in the inability for a particular loan to meet these specified deadlines. TB&W will work as diligently as possible to accommodate all loans in the pipeline. We will be unable to grant any extensions or exceptions to these requirements.

VA Streamline Refinance: What Does This Mean?

Although the FHA/VA guidelines do not officially require a minimum credit score, virtually all lenders (and all of the major lenders) in the US are now requiring a minimum of a 620 credit score. TB&W was the last major US lender who was not requiring that you had at least a 620 minimum credit score. There may still be lenders who are able to do a VA or FHA refinance streamline, but it will be more difficult to find them.

I Got A Streamline Notice In The Mail: What Does It Mean?

Many people are getting notices in the mail telling them that they are eligible for either a VA Streamline or a FHA Streamline loan.

What does it mean when it says that you are eligible for a VA streamline or FHA streamline refinance?

It means that you might be eligible to participate in a streamline program where you don’t have to completely re-qualify for a new loan. When you took out your loan, you were required to provide documentation regarding your income, assets and credit profile.

With the FHA and VA streamline programs, you are not required to provide income, asset or credit information (NOTE: although HUD doesn’t require credit information, many lenders are now requiring it — so be sure to ask your loan officer if a minimum credit score is required on a VA streamline loan with the investors that they are using). All that is required (generally speaking) is that you have made your mortgage payments on time for the last 12 months and that you can financially benefit from the FHA or VA streamline transaction.

A FHA or VA streamline refinance is refinancing your mortgage — even though it is much easier and usually faster to do because there are very few moving pieces (when you don’t have to prove income, assets or credit scores, it is much easier to get a loan done).

So if you have gotten a mailer from Wells Fargo, Chase, Citibank, GMAC or any other lender talking about the VA streamline program and how you might be eligible — know that you can speak with any VA approved lender about your file, it is not a requirement that you speak with the lender who sent you the letter!

VA IRRRL Streamline: Owning Multiple Properties

Pretend for a moment that you own multiple properties.

Pretend that you have a VA mortgage loan on your primary residence and have another property that is an investment property.

For whatever reason, you have been forced to do a short sale on your investment property – and you have missed more than 5 payments in a row on the property.

But you have always been current on your current VA loan that is your primary residence.

Can you participate in the VA IRRRL streamline program?

It depends on the lender.

If this situation sounds like your situation (or similar) be sure that you explain it in detail to your loan officer who can help you find a lender who will only require a Verification of Mortgage (VOM) on the loan you are currently wanting to streamline.

Even though most lenders today will require that you provide an updated VOM on all properties that you own, it is still possible to find a lender who only requires an updated VOM on the property that you are trying to streamline.

You just have to know where to look.

Oh – and as always, the lenders on the VA streamlines seem to be changing the rules at least weekly – so be sure to keep in contact with your loan officer until your deal funds just to be sure.

VA Streamline Refinance: Is An Appraisal Required? Maybe.

For many years, the VA streamline refinance (aka the VA IRRRL program) did not require an appraisal in order for a Veteran to refinance their VA loan and get a lower interest rate.

But that may be changing.

It is not uncommon now for some lenders who lend money on these loans to require some form of an appraisal. It can be a full blown appraisal, it can be a drive-by appraisal — but the point is that many are now requiring it where before they did not. And FHA/VA has not changed their criteria for what they will insure — an appraisal is currently not required in order for a VA streamline to be insured.

As an example, an announcement by Wells Fargo to all correspondent lenders said:

“in an effort to mitigate the risk of declining home values on VA IRRRL transactions on May 18th will require the seller to obtain and deliver a conventional appraisal to Wells Fargo. Please Note: VA has indicated this appraisal should not be submitted to the VA with the guaranty package.”

Does this really make any sense?

Not really.

But it isn’t the first time that things haven’t made sense in the mortgage market recently.

If you are in the market for a VA streamline and your loan officer is telling you that an appraisal is now required, be sure to ask him if he has access to any other VA lenders – many lenders are still not requiring VA streamlines to have an appraisal.

VA Streamline Refinance: Lower Monthly Payments

The VA streamline refinance has been around for quite a few years – and it is a focused effort by the VA to help veterans secure the lowest fixed interest rate available.

The VA streamline is also known as the Interest Rate Reduction Refinance Loan (IRRRL).

The VA streamline is simply a way for people who are currently in a VA loan to lower their interest rate with very little or no out-of-pocket costs. The VA streamline refinance should be done with very little effort and can help veterans start saving immediately.

The VA streamline allows you to refinance your current mortgage to a lower interest rate when it is available and is only available to veterans who used their VA eligibility when initially purchasing their house.

“No Cost” VA Streamline loans let you refinance your mortgage with no out-of-pocket expenses. There are two different ways a lender can help you with a VA refinance. One is that you take a slightly higher interest rate and the lender picks up all costs. The other option is to get the lowest possible interest rate available and just roll in the leftover fees involved.

But either way, the VA streamline refinance program should help you save a significant amount of money on your VA loan — which is what it was intended for.

If you are veteran, now is a great time to see if the VA Streamline program can help you lower your monthly payments. Find a VA Streamline Expert now at 888.448.2669

VA Streamline Refinance: VA IRRRL Refinance Program

VA Streamline Refinance Program (aka The VA IRRRL Program)

The VA Streamline Refinance is designed to help veterans secure the lowest fixed interest rate available and is also known as the VA Interest Rate Reduction Loan program (IRRRL). This loan option is a way for current VA homeowners to lower their interest rate with very little or no out-of-pocket costs. Both the Arizona VA Streamline and the California VA Streamline are more popular than ever.

The VA IRRRL Streamline is supposed to be “fast and easy” with minimum documentation requirements, it can help veterans start saving money on their monthly mortgage immediately.

VA Streamline Program highlights include:

• No appraisal is required
• Will not need to provide bank statements, W2s, job verification or paycheck stubs
• You cannot receive any cash at closing
• It is possible to roll all closing costs and prepaid items into the loan amount – so no out-of-pocket costs
• You must be current on your existing VA mortgage and not have had more than one 30-day late mortgage payment within the last 12 months.
• Upon closing, it is possible to defer a monthly mortgage payment
• Within 30 days of closing, you will receive the money that was held in your old escrow account because a new escrow account will be set up with your new loan

VA Streamline Refinance Information from VA.gov

“Veterans are strongly urged to contact several lenders.  There may be big differences in the terms offered by the various lenders you contact.

Some lenders may contact you suggesting that they are the only lender with authority to make IRRRLs.  Remember – Any lender may make you an IRRRL.

Some lenders may say that VA requires certain closing costs to be charged and included in the loan.  Remember – The only cost required by VA is a funding fee of one-half of one percent of the loan amount which may be paid in cash or included in the loan.

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.”

If you are veteran, now is a great time to see if the VA Streamline program can help you lower your monthly payments. Find a VA Streamline Expert now at 888.448.2669