Other costs include a VA funding fee. The fee for an IRRRL is 0.5% of the value of the loan and, in the case of cash withdrawal repayments, the fee ranges from 2.3% to 3.6%. Some veterans with service-related disabilities, certain surviving spouses, and active-duty service members who have received a Purple Heart do not have the fee. You'll have to pay a financing fee, as well as any additional closing costs charged by your lender.
In the case of an IRRRL, it will be 0.5% of the loan amount. For refinancing with cash out, it will be 2.3% of the loan amount if it is the first time or 3.6% after the first use. The type of VA refinance loan, the borrower's credit rating, the loan-to-value ratio, and other factors can influence VA refinance rates. A simplified VA refinance loan, also known as an interest rate reduction refinance loan (IRRRRL), is a simplified refinancing program that can only be used to refinance an existing VA mortgage.
However, the VA funding fee and its interest rate will be higher with a cash out refinance compared to a VA refinance loan with reduced interest rates (IRRRRL). VA loans usually have even more attractive interest rates than other types of loans, giving VA borrowers an opportunity to earn potential savings. VA IRRRL do not allow cash to be extracted from refinancing, except for a limited amount to improve energy efficiency.
