If you are currently in a VA loan, then you should absolutely be reaching out to your local lender to discuss your eligibility for the VA Interest Rate Reduction Refinance Loan (VA IRRRL).
However, unless someone shut your mailbox with duct tape, these types of offers usually come pouring in on a daily basis from all sorts of lenders claiming to be affiliated with the government.
Or worse yet, associated with your existing lender. You probably have seen similar marketing pieces if you are now in a Federal Housing Administration loan as well.
If you’ve received any of these types of offers, please be careful and read all of the fine print before replying to the source of the mailer.
Unfortunately, most of the offers received by veterans in the mail turn out to be false and misleading. While this is certainly not a surprise, it’s not right.
As with a lot of mortgage mailers that are sent out, the intent of the source is to gain your attention with some sort of interest rate that is much lower than the one you have now.
But if the veteran doesn’t catch all of the details, they are looking at a rate that is likely an adjustable one and not fixed. The saying “if it looks too good to be true, then it probably isn’t”, definitely applies to the majority of these mailers.
Another trick from these sources is to print your new lower payment directly on the mailer. Although, this new lower payment does not always match the payment that is associated with the rate on the mailer.
Yes, it’s a sneaky way for a crooked marketing source to capture your attention with either a payment or a rate that not only does not match, but most of the time doesn’t even align to the principal balance of your current loan.
Hopefully, one of these days the Consumer Financial Protection Bureau (CFPB) will work on regulating this part of the industry as it relates to these interest rate reduction mailers for VA and even FHA borrowers.
In the meantime, assuming you can connect with a reputable lending source to get the correct information about your loan options, the VA IRRRL offers some incredible benefits to the borrower.
According to the Department of Veterans Affairs, “no appraisal or credit underwriting package is required when applying for this loan.” In addition, as long as your new payment does not increase by more than 20 percent, only a verbal verification of employment is required.
Other benefits include the ability to get the loan done with no money out of pocket by building all costs of the refinance into the new loan or by making the new loan at an interest rate high enough to enable the lender to pay the costs.
Lastly, a new certificate of eligibility is not required as well. You can leverage your current one to show any prior use of your entitlement or your lender can electronically access the VA system to check on it that way, too.