The VA streamline refinance, also known as an IRRRL, has helped millions of US military veterans and service members lower their mortgage rate and house payment.
While the VA streamline is one of the easiest refinance programs available anywhere, it can be made a little more complicated by life events.
For instance, what if a borrower needs to be removed from the loan due to death, divorce, or other event?
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Eligible Situations for Borrower Removal
VA guidelines do allow you to remove a borrower during the VA streamline refinance process, under some circumstances. The rule of thumb is that the eligible veteran must stay on the loan except in the case of death. In cases that the veteran passes away, the spouse must be on the original loan. Acceptable situations are as follows.
- You got divorced since you last purchased or refinanced the home. You are the eligible veteran who qualified for the loan and you wish to remove your ex-spouse.
- You are the eligible veteran, and your spouse died since the purchase of the property. You wish to remove your deceased spouse from the loan.
- You are divorced and remarried since the home purchase and wish to remove your ex-spouse and add your new spouse.
- You are not an eligible veteran, but your spouse, who was the eligible veteran, is now deceased and you were on the original loan. You are eligible to use a VA streamline refinance, and simultaneously remove your deceased spouse.
- You are the eligible veteran and you purchased the home with another individual who is not your spouse, such as a sibling or roommate. You now wish to remove that individual.
In these cases you may be able to remove a co-borrower from the loan without doing a full refinance that requires income, asset, and appraisal documentation.
VA Streamline Borrower Removal: Non-eligible Circumstances
You may not use a VA Streamline to remove a borrower in the following situations.
- You are a divorced spouse of the eligible veteran. You are not eligible for a VA streamline.
- You married a veteran after he or she purchased the home. If the veteran passes away, you are not eligible to refinance with a VA loan. You would have to have been on the loan when it was opened.
- You are a new spouse of a veteran who died and you were not on the original loan.
This list does not cover every situation, but the general idea is that a surviving spouse must be on the original loan note to use a VA streamline if the veteran dies.
Be sure to ask your lender about your situation when applying for the loan. Each lender may impose its own rules that may be more strict than VA guidelines.