Thanks for helping me parse junk mail, your site is great. I’m on active duty and have not been able to find IRRRL mailings on your site, point me to one if I’m wrong. But I get a lot of these because of the significant rate reductions since COVID. Was wondering if you could help me parse them and tell if they’re legitimate or even legal. For instance I’ve read on some other sites that IRRRL cannot promise cash payments.
The mailer you sent me seems to try and give the impression it is somehow related to the VA. Wow!
The U.S. Department of Veterans Affairs does provide specific advice regarding a VA Interest Rate Reduction Loan (IRRL). And as usual, the facts are important.
You may be able to get an IRRRL if you meet all of the requirements listed below.
All of these must be true. You:
- Already have a VA-backed home loan, and
- Are using the IRRRL to refinance your existing VA-backed home loan, and
- Can certify that you currently live in or used to live in the home covered by the loan
Note: If you have a second mortgage on the home, the holder must agree to make your new VA-backed loan the first mortgage.
The VA says: “If you have a VA home loan be careful when considering home loan refinance offers. Claims that you can skip payments or get very low interest rates or other terms that sound too good to be true may be signs of a misleading offer.” – Source
The VA also provides additional warnings that say “If you have a VA home loan, then there is a good chance that you have already come into contact with unsolicited offers to refinance your mortgage that appear official and may sound too good to be true.
Many of these solicitations promise:
- Extremely low interest rates
- Thousands of dollars in cash back
- Skipped mortgage payments
- No out-of-pocket costs
- No waiting period
Don’t be fooled. Before responding to any unsolicited offers, here is what you need to know.” – Source
The VA also says, “How will you know if the offer is too good to be true? Here are some offers and tactics to watch out for:
Offers to skip one or two mortgage payments – Lenders sometimes advertise this as a benefit of a VA mortgage refinance; in fact, VA prohibits a lender from advertising the skipping of payments as a means of obtaining cash in an Interest Rate Reduction Refinance Loan (IRRRL) . Certain lenders nevertheless use this as a selling point when they are unable to offer cash-out or a significantly lower interest rate.
Offers to receive an escrow refund – Lenders may promise that you will receive a certain amount of cash as a refund from your escrow account; however, the amount you may receive is dependent on how much is left in your account at the time the loan closes, which may be much less than you were promised. We have heard from service members who were promised a certain refund amount and received a much lower amount at closing. We have also heard from service members who have experienced problems with their new escrow accounts after closing and have had to make higher monthly payments to make up for the shortfall.
Low-interest rates without specific terms – Lenders may advertise a low-interest rate to get you to respond to an advertisement. You might assume these rates are for a 30-year fixed-rate mortgage, but in many cases, the rates are for a 15-year fixed-rate mortgage or an adjustable-rate mortgage, or you may have to pay discount points to receive the advertised rate.
Aggressive sales tactics – Certain lenders may try to push you into a VA mortgage refinance. For example, you may be called by a lender multiple times or receive VA mortgage refinance offers in the mail that look like a check or bill to get you to open it. You may be pressured to refinance your VA loan only a month or two after you closed on your current VA loan.”
The offer you sent me above appears to try and look official, promises extremely low rates and says you can skip initial payments.
The back of the mailer says the company that is responsible for this offer is located at 384 South 400 West, Suite 100, Lindon, UT 84042, 801-341-7000.
A Google search for that address resulted in multiple mortgage companies so who is even really behind the offer?
I would suggest you evaluate these mailers as an offer to try and sell you something. The IRRL is a real thing but I would suggest you contact your current VA mortgage servicer and ask for assistance in taking advantage of an IRRL and to see if it would make sense for you. But that’s just me.
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