Change Date

September 15, 2004, Change 4

·  This section has been changed to create subsection lettering.

·  Subsection a has been updated to remove the reference to CRV.  Certificates of Reasonable Value are no longer issued by VA.

a. Table IRRRL vs. Cash-out

The following table provides a quick reference for IRRRLs versus cash-out refinances

Feature

IRRRL

Cash-out Refinancing

Purpose

To refinance existing VA loan at lower interest rate

To pay off lien(s) of any type - can also provide cash to borrower

Interest rate

Rate must be lower than on existing VA loan (unless existing loan is ARM)

Any negotiated rate

Monthly payment amount

Payment must be lower than on existing VA loan (unless ARM being refinanced, term shortened or energy efficiency improvements included)

No requirement

Discount points

Reasonable points can be paid - only two of these points can be included in the loan amount

Reasonable points can be paid - if paid from loan proceeds, do not exceed 90 % loan limit

Maximum Loan

Existing VA loan balance plus allowable fees and charges plus up to two discount points plus the cost of any energy efficiency improvements plus the VA funding fee

90 % of the reasonable value of the property indicated on the [ ] NOV plus the cost of any energy efficiency improvements plus the VA funding fee

Maximum Guaranty

See section 1 subsection i of this chapter.  Guaranty is at least 25 percent in all cases

$36,000 - See section 4 of chapter 3.