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VA Streamline Refinance Loans, Marriage, and Divorce

If you took out a VA loan and want to apply for a VA IRRRL or Interest Rate Reduction Refinancing (also known as VA Streamline Refinancing), there are a few guidelines to be aware of when it comes to changing marital status, co-borrowers, and other factors that related to getting married, divorced, or re-married.

If you want to apply for a VA IRRRL loan, all parties named on the original loan must be named on the new VA loan. One of the reasons this VA home loan is nicknamed Streamline Refinancing is because there is no credit check and much less paperwork than what you'd fill out when taking out a brand new VA home loan. That's because all the original borrowers named on the loan have already been checked out by the VA.

Removing a borrower from the VA IRRRL loan would change the entire status of the loan, requiring a new credit check, debt-to-income ratio check, etc. If you want to get a new VA loan pending or after a divorce, you will need to apply for a "full documentation" VA loan in the same way you applied for the original loan.

If you experience a divorce and need to refinance with your ex, you'll need to make an arrangement with your ex-spouse as to the status of the loan, especially if you are letting the spouse keep the home. In cases like these, it's best to have the spouse arrange for a conventional refinancing loan in his or her own name. If you do a VA streamline refinance loan with your spouse, remember that your VA loan eligibility is tied up in the property you are currently paying on, even if the spouse has agreed to pay the entire mortgage. When the non-military ex-spouse agrees to refinance with a conventional loan in their own name, you will have your eligibility restored once the property has been paid off in full and you meet the VA's other eligibility requirements.

If you have a VA mortgage and want to marry or re-marry and apply for a VA streamline refinance loan, you can add the new spouse to your VA IRRRL. Ask your loan officer what may be required of the new person (credit requirements, etc) in order to add them to the loan. It's important to note that regardless of the status of the loan--whether you are refinancing with an ex-spouse or a new spouse who is being added to the loan--the borrower cannot get any cash from the refinancing.

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