Which isn’t true.

VA hasn’t changed their credit requirements on the VA streamline refinance program.

But…

What is true is that many lenders have started requiring that Veterans wanting to participate in the VA streamline loan program now have a minimum credit score.

So, in plain English: While VA hasn’t changed their requirements, many lenders have and are now requiring a minimum credit score for all VA streamline refinances.

What This Change Means For Veterans

When a lender changes their guidelines and starts requiring a minimum credit score, it doesn’t mean that you can’t do a VA streamline loan, it means that if a lender tells you “no”, you just need to shop around for another lender. Becasue each lender makes independent risk decisions when setting risk policy for their company, some lenders will require say a 580 credit score while others will require a 620.

Each one is different.

So if you find yourself in the situation where you cannot qualify at one lender for the VA streamline refinance due to a poor credit score – be sure to ask around.

You might be surprised to learn that people are still doing VA streamline refinances with no minimum credit score.

Recently, some lenders started requiring an appraisal for a VA streamline, something that is completely new to the VA streamline program. It used to be that one of the benefits of the VA streamline program was that you didn’t need an appraisal.

That is still the case with some lenders — some are still not requiring an appraisal — but some are.

To further confuse people, some lenders are now requiring a full blown appraisal, some are only requiring a drive-by appraisal — but the point is that many are now requiring it where before they did not.

As an example, an announcement by Wells Fargo to all correspondent lenders said:

“in an effort to mitigate the risk of declining home values on VA IRRRL transactions on May 18th will require the seller to obtain and deliver a conventional appraisal to Wells Fargo. Please Note: VA has indicated this appraisal should not be submitted to the VA with the guaranty package.”

Does this really make any sense?

I don’t know for sure — but I do know that you shouldn’t be surprised if your loan officer tells you that you now need an appraisal on a VA streamline… and you might want to try to find another loan officer who has access to a lender that doesn’t require an appraisal on a VA streamline.

If you are in the market for a VA streamline and your loan officer is telling you that an appraisal is now required, be sure to ask him if he has access to any other VA lenders – many lenders are still not requiring VA streamlines to have an appraisal.

The VA streamline is also referred to as the VA Interest Rate Reduction Refinance Loan or VA IRRRL for short (and you know how Veterans have an acronym for everything ).

The VA streamline program requires very minimal documentation, and can help veterans start saving money on their monthly mortgage very quickly. Because the California VA streamline program is also known as a “streamline” loan, you cannot receive any cash back at closing.

California VA Streamline Refinance Program Highlights Include:

• No appraisal required
• Must be current on the existing VA loan
• Can’t have more than one 30-day late payment in the last 12 months
• No minimum credit score required***
• You are able to roll all closing costs and prepaid items into the loan amount
• Cant get cash back at closing
• Streamlined documentation requirements mean there is no need to provide bank statements, job verification, pay stubs or W2’s

***Note: Many lenders have begun requiring a minimum of a 620 mid credit score. Many, but not all. We are still able to fund VA streamlines without a credit check, so your credit score does not matter.

Because California mortgage rates have dropped, now is a great time to take advantage of the VA streamline program.  If you have been in your loan even just a few months, you may be surprised at how much you can save with the VA streamline program and in today’s economy every little bit helps!