a. Table IRRRL vs. Cash-out (continued)

Feature

IRRRL

Cash-out Refinancing

Entitlement

The veteran re-uses the entitlement used on the existing VA loan - The IRRRL does not impact the amount of entitlement the veteran has in use

Must have sufficient available entitlement - if existing VA loan on the same property is being refinanced, entitlement can be restored for the refinance

Fees and Charges in Loan

All allowable fees and charges, including up to two discount points, may be included in loan

Allowable fees and charges and points may be paid from loan proceeds, subject to the 90% limit

Cash to Borrower

Not permitted

Borrower can receive cash for any purposes acceptable to the lender

Lien/Owner-ship

Must be secured by first lien - veteran must own property

Must be secured by first lien - veteran must own property

Refinance of Other Liens

Cannot refinance other liens - can only refinance the existing VA loan

Can refinance any type of lien(s)

Maximum Loan Term

Existing VA loan term plus 10 years, not to exceed 30 years + 32 days

30 years + 32 days

Occupancy

Veteran or spouse of active duty member must certify to prior occupancy

Veteran or spouse of active duty member must certify as to intent to occupy

Appraisal

No appraisal is required

Appraisal is required

Credit Underwriting

No underwriting is required except in certain cases

Full credit information and underwriting are always required

Automatic Authority

All lenders can close IRRRLs automatically, except if refinanced loan is 30 days or more past due, prior approval is always required

Only lenders with automatic authority can close these loans automatically

Law

38 U.S.C. 3710(a)(5)

38 U.S.C. 3710(a)(8)