May 28, 2021
To show their ongoing support and dedication to active-duty service members and veterans, PenFed Credit Union has announced they are offering a No-Closing-Cost VA Streamline Refinance1. This unique offering demonstrates their continuing commitment to give back to those that have helped the country so much.
VA Streamline Refinance Program Basics
Borrowers with an existing VA loan could be eligible for a VA streamline refinance. It's called the Interest Rate Reduction Refinance Loan (IRRRL). These refinance loans are extremely popular because there's far less paperwork compared with a VA purchase loan or a VA cash out. Although a borrower can't get cash out, this type of refi can lower the interest rate or change the loan term.
Here are some of the significant advantages.
- In most cases, there's no appraisal required. Not only does that save money — but it also means the loan process can go faster because borrowers are not waiting for the appraiser to show. And during the peak season, appraisers get swamped!
- With VA IRRRL rates at historic lows, borrowers can save hundreds of dollars each month on their mortgage payments. They can take their savings and pay the loan down faster or give themselves some breathing room in their monthly budget.
- And a VA streamline refinance isn't just for primary residences. Second homes and investment properties are eligible for an IRRRL as long as the borrower has previously lived in the property as their primary residence. That could make a big difference, especially for rentals. With a lower monthly payment, there's more profit.
Now let's take a look at closing costs.
Does the VA IRRRL have closing costs?
Yes, there are closing costs that borrowers usually pay for. But not with the No-Closing-Cost VA Streamline Refinance (IRRRL)1 loan from PenFed. The credit union is so dedicated to the purpose of helping active-duty service members and veterans that they will pay for the following costs:
- Title fees
- Recording fees
- Transfer taxes
- Credit report
- Flood cert
- Tax Service Fees
- VA funding fee
- Appraisal fee (if applicable)
And for borrowers that have gone through the mortgage process within the last ten years, they know how much those fees can add up.
Going to a different lender, they'd most likely have all of the above costs. Borrowers could be paying for these fees:
- Out of their pocket by leaving less money in their bank account, or
- By wrapping the closing costs into the loan, which raises the principal.
But, with PenFed, the credit union pays those fees. The fees aren't added to the balance of the loan. Plus, at PenFed, borrowers still get the historically low VA IRRRL interest rates.
How much does it cost to do an IRRRL?
For the No-Closing-Cost VA Streamline Refinance (IRRRL)1, some of the items borrowers need to pay for:
- Discount points: If they want to buy the rate down even further
- Pre-paid costs: Like homeowners' insurance and property taxes*
- Escrows: For insurance and property taxes*
*These are not an extra cost, and insurance and taxes are required. By setting up a new escrow account, the borrower will most likely get an escrow account refund from the prior mortgage service.
Is the VA IRRRL Worth it?
For veterans, their families, and service members who have been asking themselves if the No-Closing-Cost VA Streamline Refinance (IRRRL)1 is worth it — the answer is YES! Especially now. They can get a lower rate and payment — with no lender fees 2
When deciding whether to refinance, most borrowers take a look at the costs vs. their savings. Then, they see how long it will take them to recoup these costs. For example, if their fees were $4,000 and they saved $200 per month by refinancing, it would take them 20 months to recoup their investment. They'd have to decide if that was acceptable to them and if it would be a good financial move.
With the No-Closing-Cost VA Streamline Refinance1, it's a no-brainer and much more affordable because PenFed pays for the majority of the fees.
How long does an IRRRL take?
At PenFed, they've streamlined their process. Once the borrowers' application is complete, their loan will go immediately to Underwriting. That saves time and speeds up the process. The credit union's philosophy is to serve the military. That means borrowers can close with certainty with PenFed.
PenFed Credit Union prides itself on giving back to the most important part of the community — its veterans and service members. They're making homeownership as good as it possibly can be. The No-Closing-Cost Streamline Refinance 1 is their way of saying: Thank you for your service!
1Closing Costs covered are Credit Report Fees, Flood Certification, Tax Service Fees, VA Funding Fees, Title Fees, Recording Fees, and Transfer Taxes. Other fees may apply such as discount points, pre-paid interest, property taxes, and property insurance, which will be the member's responsibility.
2Other fees may apply, such as discount points to buy down the rate