If you have already taken out a VA loan, its occupancy rules must already be clear to you. However, if you are confused about the terms of occupancy, this article will help. To start, you should know about the two types of refinancing options that a VA loan offers.
Types of VA Refinancing
Two VA loan refinancing options are the Streamline or Interest Rate Reduction Refinance Loan Refinance (IRRRL) and Cash-Out Refinance. The IRRRL is an option for current VA loan holders to reduce their monthly interest payments significantly. A Cash-Out option is available for conventional or VA loan holders who are looking to use their home’s equity to receive the cash that they need to use towards emergencies, home improvements, clearing debt, etc.
If you have heard that there is one type of VA home loan refinance option that does not require occupancy, then you have heard right. The Streamline refinancing does not make occupancy compulsory; however, there is one condition. You will need to confirm that that the home was previously used as your primary residence.
Streamline is different from Cash-Out because it does not involve providing the borrower with a cash amount, and there is no credit check involved in it. To be approved for a VA Cash-Out, you must go through a VA credit check.
No Occupancy Required
With a Department of Veterans Affairs (VA) Streamline refinancing, even appraisal from the VA is not required. Once the home is refinanced and the resultant new loan is closed, occupancy is not needed. However, until your loan is closed, you will be subjected to the terms and conditions in the contract of your home loan.
The Streamline refinancing is intended to provide tangible benefits to the borrower such as lowered monthly payments or a lower interest rate. For example, if it is the refinancing of an adjustable rate mortgage, moving into a fixed interest rate is a tangible benefit even if it is higher than the current rate at which the mortgage is being repaid.
After “streamlining” your VA loan, you can even rent it out, as occupancy is not a condition for getting this benefit.