Streamline Your FHA Loan Refinance
April 11, 2021
How it Works
With an FHA Streamline Refinance, current FHA mortgage holders can refinance their loan without getting a second home appraisal. While most refinances require this step, the FHA allows its borrowers to skip it since the appraisal was already completed with the first mortgage. This means that a Streamline Refinance costs less and closes faster.
There is also a “non-credit qualifying refinance” where mortgage holders don’t need to requalify with an income and credit check. This is especially beneficial for FHA borrowers who have changed or lost jobs with during uncertain times.
Requirements for the FHA Streamline Refi
FHA borrowers considering a Streamline Refinance should know that there are certain requirements to qualify.
They must be current with their monthly payments. While the FHA makes some consideration for late payments, mortgage holders will need to have a history of timely mortgage payments to be eligible for the Streamline Refi. Also take note that while the FHA might make some exceptions for late payments, your lender may have their own overlays in place, and might not consider you for the refinance based on your payment history.
Eligible borrowers also need to have a well-established history of payments, similar to a credit history. They must have made at least six-monthly payments and have had their existing FHA mortgage for a minimum of 210 days to be considered for the FHA Streamline Refinance option. The FHA usually makes exceptions for this when it comes to life changes, such as divorce or inheritance.
Finally, there must be a net tangible benefit. The FHA Streamline Refinance is only approved if it makes financial sense and if there is a benefit to the borrower. This could mean a lower interest rate, a shorter loan term, or both.
What You Should Know
There are a few things to keep in mind if you are an FHA borrower considering the Streamline Refinance.
There are still closing costs that you will need to pay. The FHA does not allow financing any closing costs in the price of the loan, except the Upfront Mortgage Insurance Premium. If you are considering using gift funds or other sources, make sure you talk to your lender to get approval.
FHA guidelines limit no more than $500 cash-out with a Streamline Refinance to accommodate changes that might be made at closing. So, if you are thinking about a cash-out refinance, the FHA Streamline Refi is not the best option for you.
If you are still interested in refinancing, talk to your loan officer to see if you can use the FHA Streamline Refinance to take advantage of the falling interest rates to lower your monthly payments or shorten your mortgage term.
------------------------------
RELATED VIDEOS:
Home Equity Can Secure Your Second Mortgage
Consider the Advantages of Discount Points
FHA Limits are Calculated and Updated Annually
FHA Loan Articles
October 31, 2024When buying a home for the first time, it helps to know how long the process can take. How do you know if your appraisal report is delayed if you don’t know how long the FHA allows for the process to be completed? How long does it take to get from the final offer to closing day? A “typical” FHA loan process may take up to 45 days from start to finish. Several factors can influence this timeline.
October 30, 2024Just because an FHA loan is designed to be more lenient with FICO scores and require a lower down payment doesn’t mean the house you buy with that loan is less than ideal. Did you know that FHA loans have minimum property standards to ensure the home is safe and livable? Those standards require the home to have an “economic life” for the entire term of the loan so you can freely sell the property later on if you choose to do so.
October 29, 2024Buying a home with an FHA mortgage is a major life decision, and preparation is essential before you start house hunting or consider making an offer on a property.
How to get started? In the early stages, establishing your budget and how much work you need to do on your credit is key. But once you have gotten past the initial phase of that planning you’ll want to consider the house itself and what you want from it.
October 25, 2024Mixed-use properties combine residential and commercial spaces. Some borrowers applying for FHA home loans want to know if purchasing such a property using an FHA single-family home loan is possible. The FHA does allow the use of its loans for mixed-use properties, but certain conditions must be met.
October 24, 2024Buying your first home is a major milestone. If you use an FHA mortgage to buy your home, you’ll have two types of insurance to consider. One type is the FHA-required mortgage insurance premium, which is paid for 11 years or the loan's lifetime, depending on your down payment, loan term, and other variables.
