FHA Streamline Refinance basics questions and 5 requirements

by Advisor Voices
FHA Home Loans, Mortgage Refinance,
FHA Streamline Refinance basics questions and 5 requirements

The FHA streamline refinance program helps current FHA homeowners lower their rate and payment without most of the traditional refinance documentation. It is a fast and cost-effective way to refinance that comes with lenient documentation and credit standards. In 2016, the FHA streamline has become an even better value. FHA lowered its mortgage insurance premiums by 0.50%. Most borrowers can now drop their interest rate and their monthly mortgage insurance with one refinance transaction.

What is a FHA Streamline refinance mortgage loan?

The FHA Streamline is a refinance mortgage loan available to homeowners with existing FHA mortgages. The program simplifies home refinancing by waiving the documentation typically required by a bank, including income and employment verification, bank account and credit score verification, and an appraisal of the home. Homeowners can use the program to reduce their FHA mortgage insurance premiums (MIP).

This refinancing option is considered streamlined because it allows you to reduce the interest rate on your current home loan quickly and oftentimes without an appraisal. FHA Streamlined Refinance also cuts down on the amount of paperwork that must be completed by your lender saving you valuable time and money.

In order to qualify for a Streamlined Refinance your original home loan must be an FHA loan in good standing and the refinance must lower your monthly interest payments. This type of refinancing option reduces your monthly expenses by lowering your payments but there is no option to receive cash back. This works well for people who are in good financial standing with no significant debt because it allows you a little extra money each month that can be put to good use elsewhere.

Why FHA streamline refinance so popular?

This type of refinance option requires very little paperwork. It also doesn’t require an income verification or a re-appraisal on the property. Unfortunately, not every can take advantage of it.

Am I eligible for a FHA streamline refinance?

FHA streamline is the process for borrowers refinancing an existing FHA mortgage loan with a new FHA mortgage loan. if you are currently FHA mortgage Holder you may be eligible for a FHA streamline refinance. FHA mortgage loans provide significant benefits for borrowers, such as relaxed credit qualification requirements, small down-payment requirements, and favorable interest rates. An FHA streamline allows a borrower to refinance an existing FHA loan at a lower interest rate.

You can check your FHA streamline refinance eligibility online here
What is FHA Streamline Loan Requirements?

For those who do have an FHA home loan, the other requirements for FHA Streamline include:

Number 1: Being current on the existing loan with all mortgage payments made on time for the last year.

Number 2: You must own the original property for at least six months before you can qualify for refinancing.

Number 3: To refinance you’ll need an FHA-approved lender. If you don’t want to use your current lender, any bank you choose must be FHA approved.

You can find and compare hundreds of FHA-approved lender here

Number 4: FHA Streamline loans do not require an appraisal, but a no-appraisal loan cannot exceed your current loan.

Number 5: Closing costs must be paid up front or arranged for through a “no-cost” FHA Streamline loan. You may also choose to include the closing costs into your loan a “with appraisal” FHA Streamline loan. In these cases you must have enough equity in the home to cover the extra amount.

Can I refinance my conventional loan with FHA refinance loan?

If you have a conventional loan you wish to refinance with an FHA refinance loan, you’ll need to apply with the usual employment verification, credit check, debt ratio requirements and other considerations. An FHA refinance loan can get you many of the same results, and you may get better rates and lower payments.

Compare loan terms. FHA loans are available as adjustable rate loans and as fixed-rate loans with 15- and 30-year terms. If you currently have a 30-year FHA loan, check the monthly payments on a shorter loan term to see if you can comfortably afford the payments. You’ll save thousands in interest over the life of the loans even though your payments could be higher.

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