I keep getting letters from random institutions claiming they can lower the interest rate on my VA loan. Is this pure scam acitivity or what? Has anyone done this? What happened?
I'm also very interested in what you learn, Angela.
We have received several letters with a brief teaser about this.
While I am happy with my interest rate, I am also an accountant and if I can go a lower rate with no negative repercussions....
My hesitation is that I am not at all familar with the banks that are sending me these offers.
I don't have any of those letters on hand. Do you know if they mentioned a specific program that was enabling this magic?
I googled "lowering VA mortgage loan interest" and I came across this article that talks about Interest Rate Reduction Refinance Loan on www.benefits.va.gov/homeloans/irrrl.asp
But something that struck me -- this is a refinance, and I think this re-incurs the VA funding fee, but at a different %. Wouldn't it also incur some closing costs?
I also googled "closed on VA loan and now getting letters to reduce mortgage interest" and checked out an article titled 3 Options to Refinance Into a VA home loan (posted September 2012)
Slide two discusses refinancing an existing VA loan into a lower rate VA loan.
Yes, I saw the article as well. The IRRRL is a VA benefit for someone who wants to refinance their home BUT IT MUST HAVE BEEN PURCHASED ORIGINALLY with your VA benefit. The interest rate will lilely go down, but that's not guaranteed depeinding on the terms or length of your refi.
Of major importance - yes, there is a funding fee reintroduced again. However, if you are a disabled vet by the VA regs, or a disabled vet but never received compensation, you have NO funding fee whatsoever.
Yes the closing costs are still there again; but the IRRRL will allow all closing costs to added to the loan to uphold the VA's promise of no money out of pocket. For me, I will really need to consider this because we may only be in our home another 2 years so I'll need to see if the amount of interest money we will save in 2 years will cover those closing costs and hopefully more.
Like Shannon and EEE3 mentioned, it's legit. It sure looks like a scam, doesn't it? Anyway, the way I see it, lenders are looking for candidates that qualify for the IRRRL program. My guess is that if you got a letter, you most likely were pre-screened and most likely will qualify (they look at payment history and credit score, among other things). I found out about the program by getting one of those letters recently (I moved to a new property about 3 months ago). I'm in the middle of the application process at this moment. The lender actually sent a notary public to my house, on my schedule, to fill out the application paperwork.
Keep in mind that these lenders are not jumping on this program to be "nice", they will get the money from you in the form of interest on your 30 or 15-year loan. They may also raise the offered interest rate to cover the closing costs if you cannot pay them out of pocket (there WILL be closing costs), so keep an eye on that. In addition, the lender will likely sell the loan to another bank and make some money that way, I suppose.
I was told that you should seriously consider a refinancing offer that lowers your interest rate by at least 1%. My current offer was 1.5% lower than what I closed at, so that is why I submitted my application. We'll see how much the actual interest rate will be when they roll the closing costs into the loan.
Visit all of these links to learn more:
Note: The links above are informational websites that are not affiliated with the VA or any goverment agency.
Thank you for the helpful information Boondoggle.
It is a good idea to make sure to research the offers make sure you have all of the details before singing anything.
Anyone with specific questions is encouraged to call out mortgage department who can help you to ensure the offers are legitimate at 1-800-531-8722.
Thank you all for posting.