The FHA Streamline Refinance is one of the fastest and easiest ways to lower your monthly mortgage payment and save you money. This type of home loan refinance is only available to homeowners who currently have an FHA home loan, so it’s worth finding out if you qualify. For homeowners who have an existing FHA home loan, it’s the simplest way to lower your monthly payment and reduce your rate. Without the hassle and documentation typically required for a refinance.
The FHA Streamline Refinance has substantial benefits right off the top:
- Limited documentation needed to refinance
- No income verification required
- Credit check not required
- Home appraisal not required
FHA Streamline Refinance: How it Works
An FHA (Federal Housing Administration) home loan is a government-backed home loan that remains popular among first-time homeowners. Since the FHA insures these mortgages, lenders offer many great benefits like lower interest rates, low-down payments (3.5%), and reduced credit score qualifications.
The most common situation for homeowners is this: your first mortgage is an FHA home loan, but the current mortgage rates have dropped. You want to take advantage of the lower rate and lower your payment, but you don’t want to incur new fees or provide a lot of documentation.
Another common situation is when a homeowner doesn’t have much equity in their home (or maybe they’re underwater), but they still want to keep their home and take advantage of lower interest rates.
With the FHA Streamline, the loan structure is similar to most refinance programs. You can refinance to a 15-year fixed rate, a 30-year fixed rate, or an adjustable rate. You can also refinance a 15-year mortgage into a 30-year mortgage. (Note, the FHA Streamline isn’t an option to refinance a 30-year mortgage down to a 15-year.
What Makes the Streamline Refinance Better
The FHA Streamline Refinance’s most significant benefit is the opportunity to lower your interest rate without the hassle of a traditional refinance.
If today’s mortgage rates are lower than your current interest rate, connect with your mortgage expert to start the process. It’s the easiest and simplest refinance program available.
- There is no home appraisal required, which is good news if you don’t have much equity built yet or if your house has dropped in value. You can still qualify for a refinance and lower your monthly mortgage payment.
- Refinance rates are typically lower than industry averages.
- MIP (mortgage insurance premium) rates might be lower.
- There are no job verification or income verification requirements. So even if you recently got laid off or lost your job, you could still qualify for a lower monthly payment.
- There is no credit check requirement. If your credit score has dropped since your first home loan, it won’t negatively affect your refinance rates or loan terms.
- The current home loan must be an FHA home loan. If you’re unsure whether your mortgage is an FHA home loan, talk with your mortgage advisor. A short conversation can help determine whether or not you might be eligible for the FHA streamline refinance.
- Recent mortgage payments (past three months) must be on-time payments. If you’re behind on your payments, talk to your lender about other options to help you save money on your mortgage.
- There is a waiting period of at least 210 days required since you last closed on your mortgage. This period is equivalent to 6 mortgage payments since your loan’s initial close date (based on your purchase date or the date of your last refinance).
- The FHA Streamline Refinance needs to be financially beneficial to the homeowner. To qualify, the refinance needs to verifiably reduce your interest rate (including insurance) by at least 0.50%.
- Recent mortgage statement showing six months payment history
- Utility bill to verify that your home is your primary residence
- Bank statements (2 months) to confirm you have funds for closing costs
- Employer information (lender may verify employment, but not income)
A Few Things to Consider With the Streamline Refinance
- Cash-out refinance is not an option with the FHA Streamline.
- The mortgage insurance premium (MIP) might still be required, depending on the start date of your current mortgage.
- There are closing costs with the FHA Streamline Refinance, which typically range 2-5% of the loan amount.
When you’re considering refinancing, working with an experienced mortgage broker makes all the difference. The FHA Streamline Refinance is a great way to lower your monthly mortgage payment through an easy process. If you think you might qualify, give us a call. We can help save you money on your mortgage.