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My Mortgage Company Won’t Give Me a VA IRRRL to Modify My Mortgage. – John

“Dear Steve,

I am a US veteran with a 6.5% VA mortgage loan. Additionally, I have about $13,000 on a credit card. I have tried for several years now to get the credit card debt down from it’s highest level of $18000 but every time I get to a point where I can pay additional amounts on the credit card a car breaks down or some other immediate financial need comes up to stop me from paying additional amounts on the card.

I own three almost junker cars. By own I mean I own them outright. I have not car loans outstanding on them.

I for the most part I have avoided adding to the credit card any purchases that could not be paid immediately or within the 25 day grace period.

I discovered that the VA has a refinance option labeled an IRRL when I can have my mortgage refinanced without an additional appraisal or having to pay the various points and fees. I have approached my current lender and several others lenders about refinancing under an IRRL and they all turn me down saying that due to the local housing market I am “upside down” in regards to my loan meaning I owe slight more that $4000 more that what they (by means of the county yearly appraisal) consider my home to be worth.

I figure I could reduce my mortgage payments by $200-$300 if a can get my mortgage refinance to the current rates of interest (about 2.5 to 3.0 %). That much extra would go a long way if I could add it to my current credit card payments.

Can you suggest any reputable mortgage lenders that I can approach about using the VA IRRL and who are willing to work with me?


Dear John,

It actually seems like we have two issues going on here.

The first is the reason your credit card reduction program is failing is because I would bet that you have not factored in a savings plan in with your debt reduction attempts. If you simply focus on paying down your debt without saving at the same time the result will be what you’ve experienced.

All it takes is one unexpected financial surprise without having and emergency fund to pay for it and everything falls apart.

If you are able to make your payments and save money at the same time then you can think about a credit counseling approach to get out of debt. If you are unable to save but have good credit, consider an unsecured debt consolidation loan to pay off the debt and lower your payments.

The second item is the house value. Tax values and not real values. The only way to determine the real value of your home, and your eligibility, will be for you to get an appraisal based on comparable values of recent sold homes. The appraiser will prepare a report showing the true value of your home and if it is less than the loan amount it seems your current lender would agree, or potentially agree, with the the VA IRRRL approach.

The VA Interest Rate Reduction Refinancing Loan guidance says that no appraisal is required but it also says that no lender is required to make an IRRRL adjustment either.

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. 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.

So you see it seems the suggestion to pursue a fair market value appraisal is a reasonable and logical approach to see if you are eligible for an IRRRL from any lender.

Please post your responses and follow-up messages to me on this in the comments section below.


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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.


  • Thanks for you quick reply.  I was actually hoping to avoid the $400+ home appraisal fee because of my cash flow challenges.

    As to the credit card debt, unless you know where I can get an interest rate lower than the 8.5% that I get from my credit card company.

    The tough part is finding a few spare dollars here or there where I can put them into savings as you suggest.  I understand and agree with the concept of the emergency savings – the problem lies in get it done.

    Thanks again.  I have looked over the website and it is definite a great resource to turn to for building a get-out-of-debt strategy.

    • How much total unsecured debt do you have or is it only the $13,000?

      I understand about the appraisal fee but it is the only way I know of to show the bank the value of the house is more. Without it their opinion wins.

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