Make your mortgage more affordable the faster, simpler way.
What’s the fastest and simplest way to refinance your FHA mortgage? The answer is via our streamline FHA refinance program. If your mortgage is insured by the FHA and you’re looking to refinance to get better terms and lower your rate and/or payment, we’ve got a few things you might want to know.
WHAT IS STREAMLINE FHA REFINANCE?
Here’s the rundown: for homeowners with FHA mortgages, there’s no better way to refinance. Streamline FHA refinance is a program designed by the Federal Housing Administration to help homeowners make their FHA mortgage more affordable without the burden of an extensive qualification process. It’s streamlined!
Loosened qualification means an easier, simpler process for you, the homeowner. Plus, it’s a win-win for the FHA: since they already insure your mortgage, they presume there’s a lower chance that you’ll default, and at the same time, they’re helping you get a better, more affordable loan.
It’s a great option if you’re a homeowner who currently has an FHA loan and your current mortgage rate is higher than today’s mortgage rates.
LET’S TALK BENEFITS
The FHA’s streamline refinance program is loaded with benefits for borrowers who qualify. Here’s a quick list to give you an idea:
- Lower your rate and/or payment just like you would with a regular home loan refinance.
- Offered as a five-year adjustable rate mortgage (ARM) or as a fixed-rate loan with a term of 15, 20, 25, or 30 years.
- Lower credit requirements. We do streamline FHA refinances as either credit qualifying or non-credit qualifying transactions. This means that we process non-credit qualifying transactions with or without a credit score while the underwriting requirements stay the same. Non-credit qualifying streamlines with a credit score will have their interest rates determined according to the qualifying credit score.
- Limited documentation. That includes no income requirements, no proof of employment, no coughing up bank statements or asset verification. This makes the process really fast.
- No home equity? No problem. Unlimited LTV means you’re still eligible even if you have little or no equity in your home.
- Save hundreds of dollars with no appraisal required.
- Less-strict requirements to help you qualify.
No home equity? No problem. Streamline FHA refinance might just be the program for you.
SOME RESTRICTIONS APPLY
Of course, as with any money you borrow, some restrictions still apply. For starters, there has to be a demonstrated net tangible benefit in a streamline FHA refinance transaction. Net tangible benefit means you can only do a streamline FHA refinance if it benefits you. Would a streamline FHA refinance lower your interest rate? Would it convert your current mortgage from an ARM to a fixed-rate loan? Put simply, would it leave you in a better standing than before? Great! That’s the kind of borrower the FHA is looking to benefit with their streamline FHA refinance program.
You can’t increase your loan balance to cover refinancing costs and your new loan cannot exceed the initial mortgage amount. When you do a streamline FHA refinance, your new loan amount is limited to the current principal balance plus the upfront mortgage insurance premium. That means you’ll either have to pay closing costs out of pocket or get a “no-cost” loan. And really, “no-cost” should actually be called “no out-of-pocket costs” because it means your lender agrees to paying the closings costs if you agree to paying a higher interest rate.
Your mortgage must be current (not delinquent) when you apply for your streamline FHA refinance, and you’re only allowed to make one late payment on your current FHA mortgage in the past year. In addition, your mortgage payments for the last six months must have been made within 30 days of their due date. Since streamline FHA refinances require less verification, this kind of payment history will show your lender and the FHA that you’re responsible with paying off your current mortgage.
Then there’s seasoning requirements. You must have made at least six monthly payments on the mortgage being refinanced and the six most recent payments must have been made on time. In addition, at least six months must have passed since the first payment due and at least 210 days must have passed since the date you closed.
Unfortunately, unlike some refinance programs, streamline FHA refinance doesn’t let you take much cash out. You can’t get more than $500 cash back for minor adjustments in closing costs. Not a good option if you’re looking to get cash out for refinancing. (Read up on our cash-out refinance program.)
Finally, like an FHA loan, streamline FHA refinance requires you to pay mortgage insurance in both a one-time, upfront mortgage insurance premium which you pay at closing and a monthly mortgage insurance payment.
Streamline FHA refinance is a pretty great program if you ask us. And actually, you should ask us. Call Cardinal today and we can determine whether you’re eligible for a streamline FHA refinance!
By Laura Lopez
View the original article here.