Better introduces VA refi loan with no appraisal or closing costs

New York-based digital mortgage lender Better.com launched a streamline refinance loan product on Monday that aims to help military veterans and service members save money on long-term interest expenses and closing costs.

Better is now offering the well-known Interest Rate Reduction Refinance Loan (IRRRL) through the U.S. Department of Veterans Affairs (VA). The product is available to active-duty service members, veterans and surviving spouses. It includes no appraisal and no income documentation requirements.

“The addition of VA IRRRL allows Better to give back to veterans and their families through mortgage offerings that make homeownership simpler and more affordable,” Vishal Garg, CEO of Better.com, said in a statement. “As we look ahead with optimism to a more favorable interest rate environment, we are proud to simplify the refinancing process for veterans, helping those who have served our country save money and secure their financial future.”

The IRRRL option allows borrowers to receive funds faster through fewer eligibility requirements and less paperwork. The product has a lower funding fee (0.5% of the loan amount) compared to the VA’s purchase, construction and cash-out refi options. It also includes a fixed rate that may save on expenses for borrowers with an existing adjustable-rate mortgage.

To qualify, borrowers must have a current VA loan that is in good standing and must have previously used their VA entitlement. The upfront closing costs can be rolled into monthly payments or waived, if a borrower has a qualifying disability.

To further speed up the process, Better is encouraging prospective clients to use its AI loan assistant, Betsy, for 24/7 support on questions. The company introduced Betsy last month following two years of work with data partner Palantir.

In September, Better rolled out a streamline refi product through the Federal Housing Administration (FHA).

Kevin Ryan, Better’s chief financial officer, told HousingWire in September that the company was seeing more web traffic and lead volume immediately after the Federal Reserve’sdecision to cut benchmark rates by 50 basis points. The Fed trimmed rates by another 25 basis points on Wednesday. And further cuts could spark consumer action on the refi front.

“Given our technology and the way people surface financial decisions now, there’s a fair amount of people starting to get out there,” Ryan said.

But the forecast for refinance demand is changing as mortgage rates have skyrocketed in the past six weeks. The average rate for a 30-year conforming loan was 6.94% on Friday, according to HousingWire’s Mortgage Rates Center, up 63 bps since the Fed’s September meeting.

Last month, Fannie Mae economists called for refi volumes to finish this year at $368 billion, which would represent a 66% increase from 2023. Looking ahead at 2025, they forecast rates to drop to 5.7%, which would spur a 70% rise in refi originations to $625 billion.