4 VA IRRRL Home Loan Limitations You May Not Know About

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This PDF is Describing about four VA IRRRL home loan limitations you may not know about

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4 VA IRRRL Home Loan Limitations You May Not Know About VA loan refinancing is not something that you should take for granted as it is easy to land yourself in a difficult situation. No doubt VA IRRRL is a great way to refinance an existing VA home loan into a lower rate there are certain things that you need to know before applying for a VA loan refinance program. This post highlights some VA IRRRL home loan restrictions that will help you make a wise decision at the time of refinancing. 1. A Delinquent Loan To be eligible for VA loan refinance you need to make your existing house loan payments on time. Borrowers with one late payment may still get a chance but then that’s about it. That’s the maximum limit of late payments allowed for qualification for VA home loan refinance. In short if your loan is delinquent at the time of VA IRRRL application it is in your best interest to wait until you are current with your payments. 2. No Cash Deduction If you think you can take cash out of VA IRRRL you stand to be disappointed. The only benefit of VA IRRRL home loan is to provide a more affordable payment alternative for your outstanding debt. The maximum benefit you can receive through refinancing is on the outstanding principal amount of the current VA loan along with funding fee for the new loan. 3. Chapter 13 Bankruptcy If you are planning to refinance your VA loan after filing for bankruptcy you must get approval from a trustee who is overseeing your case. That said there is no underwriting required from the lender’s viewpoint but the trustee who approves your undertaking of new debt. There shouldn’t be any problem getting your trustee’s approval as by refinancing your payment decreases the outstanding loan amount. There is however an exceptional case i.e. when you are refinancing from an adjustable rate mortgage to a fixed rate mortgage. Your trustee may have to evaluate the new payment structure as the payment in the latter case tend to go up as compared to the existing one. 4. Extending your Loan Period If you think you are unable to pay your loan in the stipulated time frame say ten years and wants to extend it you have a bracket of extending it up to 10 years over the original term. On the other hand if you are expecting your ten years to be changed into 30 years you may not be eligible for the IRRRL program. By adding more years to your original term you decrease the amount of principal you pay each month but get yourself into a longer payment cycle. The Bottom Line

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The limitations that VA IRRRL home loan imposes on lenders are a positive step as VA is a program specially designed for veterans. Taking cash out of a VA loan extending the term period and avoiding trustee approval in case of bankruptcy puts you at the risk of losing your home. At the end of the day the VA program has the guidelines in place to help veterans live in their dream homes. Whether you are looking for a VA loan in Texas or any other state for a better understanding of VA IRRRL home loan eligibility and application process it is important to seek professional guidance.

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