VA Loan to IRRRL

[Jeff Bonner]

So I rented out my former primary residence, one that I'd purchased on a VA Loan. One thing I'd never gotten around to doing before I rented it out was refinancing the property under a less expensive rate. Until today, I was under the false impression that I couldn't refinance the loan while not living in it, unless I wanted to refinance it under a conventional loan with less advantageous rates. I was wrong.

I found out today that I was able to refinance my VA loan to a IRRRL loan, bringing my rate down from 3.85% to 3.379. This is saving me about $125 a month ($1512).

If you're a veteran, and you're not using your VA benefits to help start/build your portfolio, you need to do it!

[Jeff Bonner]

It depends. On one hand your amortization schedule resets back to month one when you refinance. This matters because you pay more in interest expenses relative to principal at the beginning of your loan. I think the banks snuck that into some legislation back in the 80s because they knew the average American moved every 7 years, so they figure make them pay interest heavy up front. Obviously it’s favorable for the bank for you to be on the early end of the amortization schedule. 

However, when I refinanced my rate was incredible. I knew I’d probably keep that house for a long time. Made sense for me all things considered.