The VA Loan Comparison Statement is an essential document designed to guide veterans through refinancing their VA home loans, specifically under the VA IRRRL program. Much like comparing features when buying a new phone, this statement puts your existing VA loan and the refinancing offer side-by-side in an easy-to-understand format, so you can evaluate the financial benefits clearly.
Purpose and Consumer Protection
The U.S. Department of Veterans Affairs requires this statement to protect veterans from “loan churning” — a practice where veterans might be encouraged to refinance repeatedly without meaningful savings, incurring unnecessary closing costs and fees while lenders profit. The comparison statement acts like a mortgage “nutrition label,” forcing lenders to transparently show the costs, benefits, and break-even point of the refinance.
Key Sections on the VA Loan Comparison Statement
- Current Loan Details: Shows your existing loan’s principal balance, interest rate, and monthly principal and interest (P&I) payment.
- Proposed New Loan Details: Displays the loan amount, interest rate, and monthly P&I payment for the refinance.
- Closing Costs: Total fees to close the refinance that may be paid upfront or rolled into the loan balance.
- Recoupment Period: The number of months it will take to recover closing costs through monthly savings—this period must be 36 months or less under VA rules.
Recoupment Period Explained
The recoupment period is critical — it calculates how long before your monthly savings equal the upfront costs of refinancing. For example, if closing costs are $3,600 and monthly savings on your mortgage payment are $120, the recoupment period is 30 months ($3,600 ÷ $120). Since this is under the 36-month VA limit, the refinance offer is valid. Offers with a recoupment period over 36 months cannot be legally made under IRRRL rules.
Who Should Receive a VA Loan Comparison Statement?
Veterans, active-duty service members, or eligible surviving spouses using a VA IRRRL to refinance an existing VA loan should receive this one-page statement. It is not required for VA cash-out refinances, which involve borrowing against home equity.
Tips for Veterans Reviewing the Statement
- Verify that the recoupment period is 36 months or less.
- Cross-check current loan details with your latest mortgage statement.
- Confirm whether closing costs are rolled into your loan or paid upfront.
- Request and compare statements from multiple lenders to find the best terms.
Related Terms and Further Reading
To better understand your VA refinance options, see our article on the VA IRRRL (Interest Rate Reduction Refinance Loan). Also, review the Anti-Churning Rule (VA Loans) that governs refinance protections.
FAQs
- Is this the same as the Loan Estimate? No, the Loan Estimate is a general mortgage disclosure, while the VA Loan Comparison Statement is specific to IRRRL refinances.
- What if my lender doesn’t provide it? VA law requires lenders to deliver this form for IRRRLs. Failure to provide it is a warning sign.
- Can the numbers change? They should be close to final, but if terms change, lenders must issue an updated statement.
For official information on VA IRRRLs and the VA Loan Comparison Statement, visit the U.S. Department of Veterans Affairs VA Home Loans page.