Should I IRRRL Refi my VA loan?

6 Replies

I have had my SFR for about a year now. I am house hacking it (renting out two of the bed rooms). With that additional rent income, my overall out of pocket living expenses are less that what I was paying for just apartment rent. My VA loan is with a 3.625% rate right now. Would it make since to look into an IRRRL refi into a 5/1 ARM to further lower my expenses and with the exit strategy of selling the property close after a few years to reuse my VA loan for a bigger property (MFR)?

No, throw the junk mail in the trash where it belongs. 3.625% on a 30YF is great by today's standards. 

Now that rates are up and no one is refinancing, the call center refi jockeys are getting desperate to stay in business. They are proposing more and more outlandish things that make less and less sense -- I'm personally in a VA loan, so I get the junk mail and spam phone calls too (I only screw with them about 25% of the time :P ).

Originally posted by @Chris Mason :

No, throw the junk mail in the trash where it belongs. 3.625% on a 30YF is great by today's standards. 

Now that rates are up and no one is refinancing, the call center refi jockeys are getting desperate to stay in business. They are proposing more and more outlandish things that make less and less sense -- I'm personally in a VA loan, so I get the junk mail and spam phone calls too (I only screw with them about 25% of the time :P ).

 Agreed. I had a lender call me today after I put a request for info out on Zillow. I very well knew I was probably already in a good spot but I just wanted to dig around for the hell of it. 

When he called me, I told him I really only put out the request because I was curious to see what people were offering and that I already had a pretty good rate that probably couldn't be beat but if there was something better, I'd consider it to reduce my expenses. When he asked  what I had, I told him " a 3.625% 30 year fixed". His response was, "yeah..you pretty much have it as good as it'll get. 5/1 ARMs aren't even though low right now. I'll take you off of our call list. Thanks." *click* lol

Kevin, 

Just make sure you are considering the costs of the refi as well. If you refinance and it costs you 3,000 dollars, and you save 100 dollars per month, you have to stay in the property for 30 months just to start seeing the benefit. IRRRL's have a 50 basis point funding fee too, if you don't have disability, so you have to factor that in, too. Depends on your timeline.

Take the loan cost, divide it by the monthly savings and make sure you are going to stay that long. If you are not, you are better off hanging tight.  Especially given the market has done nothing but go up since last year.  

Make sense? 

Daniel Lehman
USMC Veteran

Daniel and everyone,

Resurrecting this thread: I understand the recoup period calculation (loan cost/monthly savings) for a refi. My calculation tells me it is better to stick with what I have at the moment. But should I be considering the cash flow I will save by not paying the interest on my mortgage for two months while a refi is being completed? My broker says we can skip two months of payments (P&I). I don't think I should count the missed principal payments as cash flow because that is in effect reducing my equity in my property, but what about the interest I would not be paying for those two months?

Originally posted by @Aaron Breitbarth :

@Kevin Phu Are you still locked in at that rate?

Currently at 3.0% on that property. Will be looking to refinance again soon due to the lower rates right now.