IRRRL - Interest Rate Reduction Refinance Loan
Advantages of an IRRL? SAVE MONEY - The IRRL allows qualified Veterans to quickly refinance into a lower interest rate with NO out of pocet costs - saving potentially tens of thousands of dollars. Here are a few of the features of the IRRRL...
- Poor credit is OK - Your credit score (FICO) will not be considered
- Collections OK If your in collections you can still qualify
- No Minimum Income Level - No job verification will be done.
- No appraisal Needed - No appraisal on your current property will be needed
- Allows Quick savings IRRRL process is quick so you start saving right away.
- You need no cash up front - You can roll the closing costs into the loan.
Veterans ...It is recommended that you check out a lot of mortgage lenders, you can actually choose whoever you want to work with as well, and most participate in the IRRRL program, so that means you’re not locked into using the original lender. Even shaving .5% to.75% of a point off your current rate will save 10’s of thousands of dollars over the life of the loan.
IRRRL Myths - Important! Read Before You Contact a Lender
Some good info about IRRRL info floating around that may be misunderstood about points and interest rates.
Veterans! How Much Money Can You Save By Lowering your Interest Rate 1 point (1 percent)?
This example below shows you how you can save about $202 monthly and about $61,000 over the life of your mortgage!
Let's look at the effect of a 1% decrease in your mortgage interest rate and how it can drastically save you money...
For example, say your original VA loan is for $200,000, at 7% for 30 years.
You monthly PI (principal and interest) is $1330.
Let's say after 5 years rates start dropping and you are able to re-finance into a 6% interest rate.
Since you have already lived in your home for 60 months, (5 years) you actually have paid $11,735 in mortgage payments bringing the amount you will need to re-finance to $188,265.
So now we'll calculate $188,265 at 6% for 30 years and we come up with a new monthly payment of $1128
The obvious savings is your monthly bill has been decreased by nice amount... $202.
Let's look a little furthur at the overall impact that this 1% decrease in interest rate has on the life of the mortgage.
Originally, at 7% the total amount you would have paid in interest ONLY on a $200,000 loan, over 30 years would be $278,800
By refinancing after 5 years to a 6% interest rate, the total amount you would have paid in interest on the new loan amount of $188,265 would be $217,815.
That's a savings of $72,720! (278,800-217,815=72,720) Technically we must subtract out what you already paid into the last mortgage which was $11,735 so the real savings is $60,985, still a pretty impressive savings!
So after a little analyzing we can see how it makes sense to refinance even if the interest rate drops 1%, and benefit by a lower monthly bill as well lowering the overall amount of cash out of your pocket!!!
