CalVet / VA FAQ

CalVet Frequently Asked Questions

What is a Certificate of Eligibility?

Eligibility for the VA Home Loan Program

Who's Eligible for a VA-Backed Loan? 

  • Veterans
  • Active duty personnel
  • Reservists/National Guard members
  • Some surviving spouses

Go to Eligibility Rules for detailed information.  You might also want to look at our Frequently Asked Questions (FAQs).


How Do I Prove to the Lender that I’m Eligible?

You’ll need a Certificate of Eligibility before you can get a VA-backed loan.  This section shows how you can apply for one. 

Among categories A, B, and C below, find the one that matches your situation.

Category A:  Veterans, Active Duty, and Reservists/National Guard Members Who Have Served on Active Duty

You can get a Certificate of Eligibility in any of three ways:

  1. Apply online.  Go to the Veterans Information Portal (http://vip.vba.va.gov) and click on User Registration.  For more information, click on this link for user instructions for applying online.
  2. Apply through the lender.  In many cases, lenders can obtain a Certificate online in minutes.  Check the table below entitled, “Evidence Needed for the Certificate of Eligibility.”
  3. Apply by mail.  Use VA Form 26-1880.  Return it to the address shown on the form. If you can’t print the form, just call 1-888-244-6711 and follow the prompts for Eligibility.  We can mail it to you.

Evidence you’ll need when you apply (Category A)


Category B:  Reservists/National Guard Members Who Have Never Served on Active Duty 

You can get a Certificate of Eligibility in any of three ways:

  1. Apply online. Go to the Veterans Information Portal (http://vip.vba.va.gov) and click on User Registration.  For more information, click on this link for user instructions for applying online.
  2. Apply through the lender.  Your lender can submit your application online for you.  Check the table below entitled, “Evidence Needed for the Certificate of Eligibility.”
  3. Apply by mail.  Use VA Form 26-1880. If you can’t print the form, just call 1-888-244-6711 and follow the prompts for Eligibility.  We can mail it to you.

Evidence you’ll need when you apply (Category B)


Category C:  Surviving Spouses of Veterans Who Died In Service or As a Result of Service

You must apply for the Certificate by mail. 

If your veteran spouse died after service, VA must determine that the death was due to a service-connected disability.  Please allow 2-3 months for this process unless you know that the decision on service-connected death has already been made.

Apply using VA Form 26-1817.  If you can’t print the form, just call 1-888-244-6711 and follow the prompts for Eligibility.  We can mail it to you.

Send the completed form to:

VA Loan Eligibility Center
PO Box 20729
Winston-Salem, NC 27120

Evidence you’ll need when you apply (Category C)


What Evidence Will I Need to Get the Certificate?

The evidence you need depends on the nature of your eligibility.  This chart explains.

Evidence Needed for the Certificate of Eligibility

If you are. . .

You should submit . . .

Veteran
(Includes a member or former member of the National Guard or Reserves who was once activated for Federal Service)

DD Form 214; We are required to have a copy showing the character of service (item 24) and the narrative reason for separation (item 28). 

Active duty servicemember

A current statement of service

signed by (or by the direction of):
the adjutant, personnel office, or commander of the unit or higher headquarters

showing:
Your full name
Social Security Number
Date of birth
Entry date on active duty
The duration of any lost time
The name of the command providing the information

Back to Category A

If you are. . .

You should submit . . .         

Serving now in the Selected Reserve or the National Guard and have never been activated for federal service

Statement of service

signed by (or by the direction of):
the adjutant, personnel officer or commander of your unit or higher headquarters

showing:
Your full name
Social Security Number
Date of birth
Entry date on duty
The total number of creditable years of service
The duration of any lost time
The name of the command providing the information

A discharged member of the National Guard who has never been activated for federal service

Either:
NGB Form 22, Report of Separation and Record of Service, for each period of National Guard service
OR
NGB Form 23, Retirement Points Accounting, and proof of the character of service

A discharged member of the Selected Reserve who has never been activated for federal service

Copy of your latest annual retirement points statement and evidence of honorable service

 
Back to Category B

If you are. . .

You should submit . . .     

The surviving spouse of a servicemember who died on active duty

If you’re already receiving Dependency and Indemnity Compensation (DIC), you don’t need to send any documents.

If you don’t receive DIC, please send us

  • A copy of the DD Form 1300 (Report of Casualty) from the military
  • A copy of your marriage certificate

It would be a good idea to add a simple signed statement saying that you would like to apply for DIC.  If you qualify for the home loan benefit, you probably qualify for monthly payments under DIC.

Put the servicemember’s Social Security number on all documents.

The surviving spouse of a veteran who died as a result of military service

If you’re already receiving Dependency and Indemnity Compensation (DIC), send us a copy of your award letter.
(Generally, you will already have a record on file at a VA regional benefits office.)

If you don’t receive Dependency and Indemnity Compensation (DIC), please send us

  • A copy of the veteran’s DD Form 214
  • A copy of the veteran’s death certificate
  • A copy of your marriage certificate

We recommend that you add a simple signed statement saying that you would like to apply for DIC.  If you qualify for the home loan benefit, you probably qualify for monthly payments under DIC.

Put the veteran’s Social Security number on all documents.

Back to Category C

Am I eligible for a CalVet Home Loan?

Answer:
The simple answer is that if you received a discharge classified as Honorable or Under Honorable Conditions, and you served a minimum of 90 days active duty (not including active duty for training purposes only), you are eligible for a CalVet Home Loan. Recent changes in the Military & Veterans Code and CalVet Home Loan funding policies have made most veterans eligible under state law, including those whose entire active service was during peacetime.
There are exceptions to the 90 days service requirement for veterans who
  • were discharged sooner due to a service-connected disability, or
  • are eligible to receive a U.S. campaign or expeditionary medal, or
  • were called to active duty from the Reserves or National Guard due to a Presidential Executive Order.

Current members of the California National Guard or the US Military Reserves who have served a minimum of one year of a six year obligation are also elligible.


I need a copy of my DD214 to apply for a loan. How do I get one?

Answer:

Obtaining a copy of your Release from Active Duty (DD214) is easier than ever. Once you have searched your personal records and determined that you no longer have a copy there are several things you can do. In the past veterans were advised to have their DD214 recorded in the county they went home to after their release. If you did that, contact the county recorder and you should be able to get a copy there. If you used a DD214 to apply for other benefits, such as educational or medical benefits, the agency you applied to may be able to give you a copy. If neither of these ideas work the fastest way to obtain a copy is through the National Archives on their website at \ http://www.archives.gov/veterans/military-service-records/get-service-records.html. They are the records custodian for most discharged and retired members of all branches of service. Expect a two to three week wait to receive your record, but ordering online may speed up the process. CalVet can begin processing your loan without the DD214, and we may be able to confirm your dates of service directly through USDVA. Contact one of our offices if you need assistance.


I am career military and currently on active duty. Can I apply for a loan now?

Answer:

Yes. CalVet Home Loans are available to active duty personnel. However, there is an occupancy requirement for the life of the loan. You or members of your immediate family must occupy the home within 60 days of close of escrow and continue to occupy until the loan is paid in full. If you are uncertain about how long you will be able to occupy the home before you have a change of station, you should consider whether or not buying a home is the right decision. If you have to sell the home in the first few years the costs of sale may be more than your equity in the property including your down payment and any appreciation in value that occurs. On the other hand, if your family will remain in the home even if you are reassigned, and your intent is to live in the home after retirement, it may be a good idea to buy now.


I am currently on active duty and due to be released soon. Can I apply for a loan now?

Answer:

Yes, if you or members of your immediate family will be able to occupy the home within 60 days of the close of escrow. Immediate family includes your spouse and/or dependent children. You must also have sufficient income to qualify for the loan. If you are returning to a job you held prior to your enlistment or orders to active duty, and your employer can confirm your employment and projected income, we will be able to use that income to qualify you. If you are starting a new job, the employer must confirm the start date and projected income. We can also use retirement income and your spouse’s income to qualify you for the loan. Contact one of our offices to discuss your situation and to pre-qualify.


Is there a penalty if I decide to refinance my CalVet loan with another lender later on?

Answer:

CalVet Home Loans do not have a prepayment penalty. You can pay off you loan at any time. The escrow holder handling your new loan can request a payoff from us. Since your fire and hazard insurance and disaster insurance are tied to your loan make sure you have arranged for replacement coverage before you pay us off.


Is the CalVet interest rate variable or fixed?

Answer:

Cal-Vet Loans have always had a variable interest rate, although historically rates have not been changed often, and the rate is not tied to an index. All loans issued prior to 1999 are required by law to have a uniform interest rate, and if changed they must all change together. Loans issued in 1999 and subsequent years have rates that were set based on the cost of the bond funds and market conditions, and have a cap on the rate increase of 0.5% (1/2 of 1%) over the life of the loan. It is unlikely that the department will need to change the rates on existing loans.


What is the loan term for CalVet Home Loans?

Answer:

Since the bonds that we sell to fund the program are 30-year bonds we set up all new loans for 30-year terms. However, you can make additional payments on the loan principal at any time, and the effect of making additional principal payments is to reduce the loan term. If you want to pay off your loan in 15 or 20 years we can calculate what the principal and interest payment would need to be and you can make that extra payment amount each month. There is no prepayment penalty for paying the loan off early.


Can I borrow the down payment for my loan?

Answer:

Yes. You can borrow the down payment provided that your income is sufficient to handle the monthly obligation for that loan in addition to the CalVet loan and your other monthly obligations. If the loan is to be secured by a deed of trust on the property, you must submit copies of the Note and Deed of Trust during loan processing, and we will require that the lender sign a subordination agreement acknowledging that their loan will be in second position to the CalVet loan. If the total down payment, including your cash down payment and the secondary financing, total 20% or more of the purchase price (or market value if less), then the funding fee, which is used to purchase mortgage insurance, is waived. You must disclose the source of the down payment on your loan application, and if the application does not show sufficient cash assets to pay the difference between the sales price and loan amount, we will ask you for that information.


Does my CalVet Loan affect my VA or Cal-Vet entitlement?

Answer:

Possibly. CalVet obtains a loan guarantee from the USDVA on some loans, and when VA guarantees the loan you are using both your CalVet and VA entitlements. If the VA guaranty is not obtained then only your CalVet entitlement is affected. Both CalVet and VA entitlement is restored when the loan is paid off.


How are CalVet Home Loans processed?

Answer:

The processing for a CalVet Home Loan is very similar to the process for other lenders and types of loans. Of course we need documentation to confirm that you are a veteran. Then we use the same application form and other forms that all lenders use. You can also apply on line athttp://www.CalVetLoans.com.  Your application initially will be screened by staff in our office and your eligibility will be determined. Most loans will then be forwarded to our centralized loan-processing unit in Sacramento.  We will assist you in tracking the loan, and we will provide communication so that you are aware of every status change that occurs during processing. An appraisal is ordered from an appraiser in your area, and when processing is complete you will receive a loan approval letter.  Loan documents will be sent to your escrow holder by overnight mail. You sign the loan documents at the escrow company and they return them to Sacramento and request the loan funds when they are ready to close the escrow. Most loans are processed within 30 business days, but tell us if you need to close sooner. Our loan-processing goal is to meet your needs.


How are CalVet Home Loans different from other home financing?

Answer:
There are some basic differences between CalVet Home Loans and other financing you might choose.
  • The State of California has chosen to provide CalVet Home Loans as a benefit to veterans who want to live in our state. Because it is a veteran’s benefit we make every effort to make the loan available to all veterans. We qualify you for the loan using the same criteria as other lenders, but because we are a direct lender and we service the loans we make, we are able to give every veteran extra consideration, and if we can qualify you for a loan you get the same rate as everyone else. We will not classify you as a higher risk and increase the interest rate.

CalVet uses a Contract of Sale as the financing instrument for our loans. What that means is that CalVet purchases the home you selected and takes legal title to the property at close of escrow, and then sells the property to you using a contract of sale. When the loan is paid in full, either when the last payment is made or if you refinance or sell, we issue a grant deed to transfer legal title to you. A document called a Memorandum Agreement of Sale is recorded to show that the contract exists, and you hold what is referred to as the equitable title to the property which gives you all the rights of ownership. One of the major advantages of a Contract of Sale is that CalVet is able to obtain Fire and Hazard insurance, and Disaster Insurance and provide superior insurance coverage at group rates. The technicality of holding legal title also assists us in obtaining the best possible bond ratings for the bonds that we sell to finance the program. For the very small number of veterans who default on their CalVet Home Loan, the Contract of Sale makes it easier for us to recover the property and minimize losses to the program.


How do I know when to make payments and how much to pay?

Answer:

You will receive monthly billing statements showing the amount due for principal, interest and loan impounds (escrows). A payment coupon is included with the statement to be returned with your payment. All payments are due on the first of each month. You can also set your account up for automated electronic funds transfer. Your payment would be withdrawn from your checking account on the 5th of each month. You will still receive a monthly statement, but you would not have to write a check or worry about whether or not we receive it by the 16th of the month to avoid late fees.


Can I refinance the home I currently own?

Answer:

CalVet loans can only be used to purchase a property but you can refinance your existing home through our Mortgage Bank,  at competitive interest rates and fees.  For refinance information or to apply for a refinance, please contact Massey Kouhssari or call 877-410-MONEY  If you are constructing a home on property that you already own, you can obtain a CalVet loan but you must apply before the home is complete and a certificate of occupancy is issued.


What is the interest rate on CalVet Home Loans?

Answer:

Current interest rates are published on our website.  Please remember that our interest rates are subject to change without notice. Your rate can be locked in as of the date you submit a completed loan application on a specific property, with an estimated close of escrow date. You must contact us to confirm your information and provide complete documentation before your interest rate can be locked in.


FAQs for Current Contract Holders

What do I do if I want to make improvements to my property and need to borrow additional funds?

Answer:

CalVet has a Home Improvement Loan program that can be used to finance most improvements to your home. Information is available on our website or you can contact one of our offices.


What if I need to use the equity in my home for other purposes?

Answer:

CalVet allows you to obtain financing from other lenders if you need to borrow money for any purpose using the equity from your home. You must request our consent, however consent is routinely granted subject to your CalVet loan being current or paid current during the loan process. You choose your lender and then submit a Request for Consent to Encumber to CalVet while they are processing your loan. We issue the approval directly to the lender in time for them to close.


My CalVet home was damaged by a fire/flood/earthquake, or sustained water damage from an internal source. How do I file an insurance claim?

Answer:

If your Cal-Vet home sustains damage from any of the following disasters: fire, earthquake, mudslides, flooding, wind damage or a water pipe break, please call “Sams and Associates” at 1-800-626-1613 to file a claim. Please have your Cal-Vet loan number available, if possible.


Will the interest rate on my existing loan be reduced?

Answer:

It is unlikely that rates on existing loans will change. Cal-Vet’s intent in moving away from a single interest rate for all borrowers in 1999 was to be able to offer competitive new loan rates that were effectively fixed rate loans, although the ability to increase the rate if needed was retained. Our mission is to help veterans buy homes, and we can best do that by offering you a below market rate at the time you are buying.


Can I refinance the Cal-Vet property through another company?

Answer:

Yes, of course. However, if you are considering refinancing, please make sure you consider all factors. Can you obtain comparable fire and hazard insurance? Do you need the disaster coverage that Cal-Vet offers at an affordable price? Is the life and disability insurance coverage something you need, and can you replace it at a comparable cost? Most importantly, are you really saving money? If you determine that refinancing is the correct choice for you, we recommend you contact 1-877-410-MONEY or visit his website at:  www.bankerbroker.com


Why should I keep my Cal-Vet Loan rather than refinancing through another lender?

Answer:

Over the years, Cal-Vet has added features that add value to our loans:

Cal-Vet provides fire and hazard coverage at group rates. Most loan holders find that the combination of guaranteed replacement cost coverage and low deductible are better than what they can get in the market for comparable costs. Also, Cal-Vet does not increase your premium or cancel your coverage just because you submit a claim, and our rates are the same no matter where your home is located. 
Cal-Vet’s Disaster Indemnity program cannot be matched anywhere in the market. You are protected against loss from flood and earthquake with very low deductibles and premiums (just $.80 per $1,000 of coverage).

Cal-Vet’s group Life and Disability coverage through The Standard Insurance Company helps you protect your family. The mandatory life insurance pays up to five years of your principal and interest payment in the event of the insured’s death, and you may also be able to purchase optional extended life insurance and/or disability benefits at group rates.

Cal-Vet services your loan through the life of the loan. We do not sell your loan to an unknown lender on the secondary market. We strive to provide accurate and efficient customer service, and are here to help in times of financial hardship.

Cal-Vet offers Home Improvement Loans up to $150,000 at our current below-market interest rates. 
Cal-Vet respects your privacy. We do not release any information about you or your loan to any other parties.

You will receive monthly billing statements showing the amount due for principal, interest and loan impounds (escrows). A payment coupon is included with the statement to be returned with your payment. All payments are due on the first of each month.


What do I do if I lose my statement or it does not come in the mail?

Answer:

You can call our Customer Service Unit at 1-877-410-MONEY and request a duplicate statement. If necessary, you can mail your payment without the payment coupon, but please be sure to write your contract (account) number on the check. Send your payment to:

California Department of Veterans Affairs
P. O. Box 942888
Sacramento, CA 94288-0001


Can I have my payments made through automatic withdrawals from my bank account?

Answer:

Yes, you can pay by Electronic Funds Transfer (EFT). Details and an application form are available elsewhere on our web site or you may contact our
Contract Services Unit at 1-877-410-MONEY


What is included in my payment?

Answer:

Your payments include principal, interest, and applicable property taxes and insurance premiums. The tax portion and premiums are in separate escrow (impound) accounts, and payments are made to the county or insurance carriers when due. Once each year, you will receive a Summary Statement with an analysis of your escrow accounts. The Summary will advise you of any shortage or overage, and the interest we pay you on those accounts.


When is my payment late?

Answer:

Payments are due on the first of the month and are late if received after that date. However, you have a 15-day grace period before late fees are assessed. If your payment is not received for posting by the 16th of the month, a late fee will be assessed. Any payment over 30 days delinquent will be reported to the credit bureau. Partial payments can also create a late reporting to the credit bureau if the remainder due for your payment is $4.00 or more.


If payments are due on the first of the month, why am I receiving my monthly billing statement after the first of the month?

Answer:

All billing statements on fully funded loans are mailed out on or before the 24th of the month, although there have been rare instances where statements were mailed after the 24th. However, if your loan is a construction, home improvement, or rehabilitation loan, monthly statements are mailed on or about the 1st of each month so that draws at the end of the month can be included in the interest calculation. Additional time is allowed for payments to be submitted. Once the final draw is issued, and the loan is fully funded, your monthly statements will be mailed to you prior to the 1st of the month.


What if I forget to mail my payment, or the payment is lost in the mail?

Answer:

If your payment is not received for posting by the 16th of the month, a late fee will be assessed you may receive a reminder notice if your payment has not been received by the 20th of the month. Please make your payments promptly, and allow for mail time.


What if I’m experiencing financial difficulty and might have to miss a payment?

Answer:

As soon as you realize that you might have to miss a payment, call our Collection Unit at 1-877-410-MONEY. They will help you work out a solution. Remember, a partial payment is much better than no payment at all, and there may be a way to avoid missing a payment.


If I’m behind in my payment, how do I catch up?

Answer:

Call the Collection Unit at 1-877-410-MONEY as soon as possible, and they will help you make arrangements to catch up.


What if I want to pay more? Can I reduce my loan balance faster?

Answer:

Yes! Additional principal payments will reduce your loan balance faster and save you interest costs over the life of the loan. You can include additional payments (in any amount) with your regular monthly payment. If you send a separate payment, be sure to include your contract number on the check and a note indicating it is a principal payment or curtailment.



When will I get a form showing the interest and taxes paid for the year?

Answer:

By the end of January of each year, you will receive a form (1098 or 1099) advising you of the interest and taxes paid for the previous year.


Is my CalVet loan assumable?

Answer:

We do not allow CalVet Home Loans to be assumed. Any eligible veteran can obtain a new CalVet Home Loan to purchase your home. Contact 1-877-410-MONEY for details.


Does my payment cover all of my property taxes?

Answer:

Yes, except for supplemental tax assessments if you are in the tax impound program. You should pay any supplemental tax bill yourself. If you cannot pay it, contact the Contract Services Unit for assistance.


Can I get out of the tax impound program?

Answer:

Yes. Anyone with 20% or more equity and a good credit record may be released from the tax impound program. Contact the Contract Services Unit for an application.


What if my marital status changes, or for some other reason I want to change how I hold title to my home?

Answer:

You must notify Cal-Vet when events that affect title to the property occur. Call 1-877-410-MONEY as soon as you are aware there will be a change, and we will explain what documentation is needed.


If I need to grant an easement over my property or make some other change to the legal description, what should I do?

Answer:

Call us at1-877-410-MONEY, and we will explain what is needed to modify your contract. For some modifications, there is a service fee.


Are there fees for loan servicing?

Answer:

There are fees for some services in order to offset operational costs. Call us at 1-877-410-MONEY for details.


Will the loan have to be paid off if the veteran passes away?

Answer:

No. After any insurance benefits have been applied, the surviving spouse or heirs can continue with the loan. Call us at 1-877-410-MONEY for assistance.


Can I rent the home?

Answer:

are required to occupy the home. However, you may request a waiver of the occupancy requirement if you must leave the home temporarily. Call us at 1-877-410-MONEY to see if you qualify for a waiver.


Can I take out a "second" mortgage loan through another lender behind my Cal-Vet loan?

Answer:

Yes, with the Department’s permission. You and your lender will be required to complete a “Consent to Encumber” form, which you may obtain by downloading the form from this website (http://www.cdva.ca.gov/calvet/consent.asp), by calling us and requesting the form, or by picking up the form at any Cal-Vet office.


What if I am called back to active military service from the Reserves or National Guard?

Answer:

If you are called to active service, you may qualify for relief under the Soldier’s and Sailor’s Civil Relief Act. The act mandates a reduction in interest rate to 6%, and may also protect you from foreclosure action. You also may be able to defer portions of your monthly installments during your active duty. Please call our Contract Services Unit for information if you are called to active duty.


Does Cal-Vet Refinance?

Answer:

No. Cal-Vet cannot refinance a loan on an existing home. This is a limitation based on both federal and state laws.  You can refinance your existing home through our Mortgage Bank at competitive interest rates and fees.  For refinance information or to apply for a refinance, please contact Massey Kouhssari 1-877-410-MONEY

Can a VA loan be assumed?

Yes, VA may be assumable. The buyer must meet credit qualifications, but doesn’t have to be a veteran.

IRRRL Facts for Veterans

IRRRL stands for Interest Rate Reduction Refinancing Loan.  You may see it referred to as a "Streamline" or a "VA to VA."  Except when refinancing an existing VA guaranteed adjustable rate mortgage (ARM) to a fixed rate, it must result in a lower interest rate.  When refinancing from an existing VA ARM loan to a fixed rate, the interest rate may increase.

No appraisal or credit underwriting package is required by VA.  You should be aware, however, that lenders may require an appraisal and credit report anyway.

A certificate of eligibility is not required.  Your lender may use our e-mail confirmation procedure for interest rate reduction refinance in lieu of a certificate of eligibility.

An IRRRL may be done with "no money out of pocket" by including all costs in the new loan or by making the new loan at an interest rate high enough to enable the lender to pay the costs.  (Remember: The interest rate on the new loan must be lower than the rate on the old loan unless you refinance an ARM to a fixed rate mortgage).

No lender is required to make you an IRRRL, however, any lender of your choice may process your application for an IRRRL.  While it might be the best place to start shopping for an IRRRL, you do not have to go to the lender you make your payments to now or to the lender from whom you originally obtained your VA Loan.

Veterans are strongly urged to contact several lenders.  There may be big differences in the terms offered by the various lenders you contact.

Some lenders may contact you suggesting that they are the only lender with authority to make IRRRLs.  Remember - Any lender may make you an IRRRL.

Some lenders may say that VA requires certain closing costs to be charged and included in the loan.  Remember - The only cost required by VA is a funding fee of one-half of one percent of the loan amount which may be paid in cash or included in the loan.

You must NOT receive any cash from the loan proceeds.

An IRRRL can be done only if you have already used your eligibility for a VA loan on the property you intend to refinance.  It must be a VA to VA refinance, and it will reuse the entitlement you originally used.  You may have used your entitlement by obtaining a VA loan when you bought your house, or by substituting your eligibility for that of the seller, if you assumed the loan.  If you have your Certificate of Eligibility, take it to the lender to show the prior use of your entitlement.

The occupancy requirement for an IRRRL is different from other VA loans.  When you originally got your VA loan, you certified that you occupied or intended to occupy the home.  For an IRRRL you need only certify that you previously occupied it.

The loan may not exceed the sum of the outstanding balance on the existing VA loan, plus allowable fees and closing costs, including funding fee and up to 2 discount points.  You may also add up to $6,000 of energy efficiency improvements into the loan.

NOTE:  Adding all of these items into your loan may result in a situation in which you owe more than the fair market value of the house, and will reduce the benefit of refinancing since your payment will not be lowered as much as it could be.  Also, you could have difficulty selling the house for enough to pay off your loan balance.

Some lenders offer IRRRLs as an opportunity to reduce the term of your loan from 30 years to 15 years.  While this can save you a lot of money in interest over the life of the loan, if the reduction in the interest rate is not at least one percent (two percent is better) and lots of new loan costs are rolled into the new loan, you may see a very large increase in your monthly payment.

Beware:  It could be a bigger increase than you can afford

No loan other than the existing VA loan may be paid from the proceeds of an IRRRL.  If you have a second mortgage, the holder must agree to subordinate that lien so that your new VA loan will be a first mortgage.

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