Hassle Free Refinance with FHA Mortgage Streamline Loan Program

When it comes to refinancing an FHA loan, one of the best options is to do the FHA streamline loan.

The FHA Streamline refinance loan program allows a qualifying borrower to refinance their existing primary residence FHA loan to a new FHA loan with lower interest rate or from an adjustable rate to a fixed rate loan.

The term “streamline” only refers to the amount of documentation that the underwriters require and does not mean that there are no fees. These loans will still take about four weeks to close but require much less documentation and qualifying criteria. This is a hassle free loan once you meet all the requirements and guidelines. Due to the overwhelming demand for the FHA streamline loans, many banks are taking longer time to process the refinance loan applications than usual.

FHA Streamline Refinance Requirements

If you have an existing FHA loan, you can choose the streamline option which does not require an appraisal. This is extremely important if you are concerned about the value of the property. In many parts of Utah, property values have been negatively affected over the last few years. This option would allow you to refinance your home and take advantage of the low interest rates that we have right now.

With your lower payments, you would be able to take the money saved, add it to your new mortgage payment, and get out of debt earlier. Not only would you be able to get out of debt earlier, but you would save tens of thousands of dollars of interest over the life of the loan.

The other major benefit of the FHA streamline loan is that the requirements for documentation are much less. This makes it much easier to get the loan approved and it makes it easier for you!

Benefits of a FHA Streamline Refinance

  • No out of pocket costs
  • May be able to skip two months payment out of pocket
  • No appraisal if new loan is lower than the original
  • No verification of income or assets
  • Historically low interest rates

Basic Requirements to Qualify:

  • You must already be in an FHA home loan
  • No cash may be taken out using the streamline refinance
  • The refinance must lower your monthly payment and interest rate unless you are getting out of an adjustable rate.
  • You may not have any 30 day late payments within the previous 12 month

How Does the Streamline Loan Process Work?

The FHA streamline program is one of the best out there for refinancing. Right now, people are really benefiting from this program. I wanted to make sure that I took the time to educate my clients on this program.

The benefits are so high that it is something that most people should consider. It is a great way to realize a monthly savings on your payment. Here is how this program works:

The FHA streamline loan requires that you already have an existing FHA loan. You cannot use the streamline program if you have a conventional loan. That are other refinancing programs for people with conventional loans.

Because you are going from one FHA loan to another, the requirements for obtaining the loan are reduced. With this program, here are some important things to know:

  • Income not verified
  • Appraisal not required
  • Credit will be pulled (most investors require a minimum 640 score)

Because an appraisal is not done, this type of loan can be done even if your property has experienced a decrease in value. For many people, this is a way to save money each month even if property values have declined.

The other good news about this program is that FHA requires that you to reduce your mortgage payment by at least 5% or the loan will not be approved. So, you have to be able to save money in order to get the loan.Who would not want to save money?

It has been my experience that in order to realize the 5% monthly savings, you must drop the interest rate by anything more than half a percent. When the interest rate only drops half a percent, the savings is not great enough to meet the guidelines. So, it has to be more than half a percent.

With FHA streamline loans you will be able to save hundreds of dollars each month. This is additional cash flow that they can use to accumulate wealth, pay off their mortgage early, or whatever else is desired. Not to mention that lowering the interest rate will also reduce the total amount of interest that will be paid over the life of the loan.

FHA MIP on Streamline Refinance

There is only one downside to the FHA streamline program. That downside is that FHA has increased the fee that they charge for mortgage insurance. This mortgage insurance is insurance for the lender in the case of default on the loan. Since default rates have increased over the last few years, FHA has increased the mortgage insurance fee to compensate for this.

Even though this can be a potential turnoff from doing the FHA streamline program, most of my customers are getting enough of a monthly savings that this additional cost is paid back in several months.

Another FHA home loan refinancing option is to do the full qualification loan. This would be if you had a conventional loan and wanted to switch to FHA, or if you wanted to take cash out of the equity of your property.

FHA Streamline Refinance Rates

FHA refinance rates are very competitive and provide a great alternative for financing. If you do have enough equity (20% equity) in your property, you would be better off to do a conventional loan and not have to pay the mortgage insurance that is required for FHA.

Since there are so many options and each loan program has requirements for who qualifies for each loan, you owe it to yourself to get the best advice that is customized to your circumstances. With my experience, my team and I can provide you with the information that you need to make the best choice for your financial peace.

Is this the right time for Streamline FHA Refinance?

Like many Americans, you may be asking yourself if now is right the time to refinance your home mortgage. The first place to start is finding out your current interest rate. Currently, the national average is for a 30 year fixed loan is around 4.5% according to Bankrate.com. If your current interest rate is higher than the average, you may want to consider a refinancing your loan. There are many options available to you at this time. If you already have an FHA Loan, you can do an FHA streamline refinance. This option cuts down on the paper work saving you time and money. Depending on your situation you may save a lot of money choosing to refinance by reducing your interest payments over the time period. The 10 year treasury yield rates have been steadily moving up over the past year. Since mortgage rates tend to follow this number, it is very possible that FHA loan rates will follow.

If you have been considering refinancing, now might be the time to take action.FHA refinancing rates are at historic lows. These rates may not hold out for much longer. Take advantage of this opportunity by contacting your FHA lender to find the specific program that fits your needs.

If you want to find out how I can help you save money using this great loan program, call me to set up a free consultation. If this loan program will not work for you, I will be the first to tell you. Plus, I pay all of the loan fees for my clients in order to help them reduce the cost of the loan. Let me show you how I can help you.