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
March 6, 2021When buying a home, you have a list of things you need to do. Get pre-approved, arrange for a home inspection, and a few other tasks. One important thing on that list is shopping for homeowner’s insurance.
February 26, 2021Many Americans go with FHA loans because there are a number of mortgage programs that can fit different needs. These programs include FHA Fixed Rate Loans, FHA Adjustable Rate Mortgages, FHA One-Time Close Loans, FHA Condo Loans, and several others.
February 21, 2021The new year came with some changes being made in the mortgage industry, particularly when it comes to Adjustable- Rate Mortgages, or ARMs. The interest rate you get with an ARM is based on an index and a margin which is disclosed when you apply for the loan.
February 6, 2021As an existing homeowner, you may want to take advantage of falling interest rates by refinancing your current mortgage. For many homeowners, the thought of going through the refinancing process can be tiresome. But an FHA Streamline Refinance could help you avoid the extra work.
January 30, 2021As your closing day gets closer and closer, you might start to feel a little nervous. Do you have everything you need? Will something delay the closing? These worries are natural, but the more prepared you are, the less overwhelming it will all seem.
