The VA streamline refinance, tested against the rules that protect you
Test 1: recoup costs within 36 months
Rule check
Under 38 U.S.C. 3709, the lender must certify that the fees, closing costs and expenses of the refinance, other than taxes, escrow amounts and VA fees, are scheduled to be recouped within 36 months of the loan date. Recoupment is measured through lower regular monthly payments, not through other savings.
Last reviewed against the primary sources listed below.
The arithmetic
Divide the counted costs by the monthly payment reduction. If the answer is 36 months or less, the test is met. The calculator does this with your figures.
Why it matters
The rule was added to stop refinances that load on fees faster than they reduce payments.
IRRRL questions
What costs count toward IRRRL recoupment?
Fees, closing costs and expenses of the refinance, excluding taxes, escrow amounts and fees paid under the VA chapter, such as the funding fee.