How Much Can a VA IRRRL Save?
How do you estimate VA IRRRL savings?
Start by comparing the current principal-and-interest payment with the proposed principal-and-interest payment. Then compare the refinance costs, new loan balance and expected holding period. Monthly savings alone can overstate the benefit if significant costs are financed or if the loan term is reset.
Monthly savings
Subtract the proposed principal-and-interest payment from the current principal-and-interest payment. Keep taxes and insurance separate so escrow changes do not distort the mortgage comparison.
Annual savings
Multiply the estimated monthly savings by 12 for a simple annual figure. This is useful for orientation but should still be compared with costs.
Break-even period
Divide the relevant refinance costs by the monthly savings. See VA IRRRL break-even.
Five-year comparison
For a longer view, compare cumulative payment savings with the financed costs and the difference in principal balance after the same period. The mortgage amortization calculator can help illustrate amortization.
Example
If a refinance saves $160 per month and the costs included in your analysis total $3,200, the simple break-even is 20 months. If you expect to keep the loan five years, you have a much longer post-break-even period than if you plan to sell next year. This is a hypothetical example, not a loan quote.
What can reduce the apparent savings?
- Points or lender fees
- Financed closing costs
- Funding fee when applicable
- Resetting the loan term
- Selling or refinancing again before break-even
Also review IRRRL rates, closing costs and the master guide.
Get a loan-specific savings review
Use your current balance, rate and payment rather than generic examples.
Request an IRRRL comparisonExamples are estimates only and not loan terms or guarantees. 360 Mortgage Inc. NMLS ID 80777.