Home loans that are insured by the Federal Housing Administration (FHA) are popular for several reasons: they don’t require a big down payment, they’re usually open to borrowers with lower credit scores, and they can be used to finance a variety of different kinds of properties. Another less well-known benefit of the FHA mortgage is its ability to be refinanced in a faster, simpler way than traditional refinancing.
Here are a few basic facts about FHA Streamline Refinancing and how the program can benefit borrowers.
Open to Current FHA Borrowers
If you currently have an FHA mortgage and are interested in refinancing, the FHA Streamline option is designed to help you lower your monthly mortgage bill, secure a lower interest rate, or adjust the terms of your loan to help you save money. FHA Streamline Refinancing is only available to borrowers who have an FHA mortgage and are current on the mortgage; i.e., they are not delinquent on payments.
You cannot use the streamline option to refinance from a conventional mortgage into an FHA mortgage. However, if you do not currently have an FHA mortgage, you may still be able to refinance into an FHA loan—you just won’t be able to take advantage of the streamline aspects (more on those below.)
With an FHA Streamline Refinance, borrowers do not have to provide as much documentation as they would with an ordinary refinancing program. For example, income documentation is unnecessary when applying for an FHA Streamline Refinance. Furthermore, the FHA does not require credit score or employment verifications. Fewer hurdles to clear means both you and the lender can save a lot of time with an FHA Streamline Refinance.
No Appraisal Needed
Since the FHA has already valued the property when you took out your original FHA loan, there is no need for an additional appraisal when you apply for a streamline refinance loan. This shortcut saves even more time and paperwork.
Must Provide a Net Tangible Benefit
Lenders can only approve an FHA Streamline Refinance if it provides a net tangible benefit to the borrower. In other words, it has to save you money. Whether by lowering your interest rate or converting your loan from an adjustable-rate mortgage (ARM) to a fixed rate, there has to be some financial benefit to refinancing.
Higher LTV Ratios
An FHA Streamline Refinance allows borrowers to have a higher loan-to-value ratio (LTV) than many other forms of refinancing. That means even if you don’t have a lot of equity in your home, you may still qualify for an FHA Streamline Refinance loan.
Finding a Lender
You can apply for an FHA Streamline Refinance with any FHA-approved lender. That means that you don’t necessarily have to stick with your current lender if you want to refinance. If you are happy with the service and rates your current lender offers, by all means, continue to do business with them. However, if you want to be sure you’re getting a good deal with a lender who offers great service, don’t feel bad about shopping around.
Here at Luxury Mortgage, we take pride in offering competitive pricing with exceptional, personalized service. We’re an FHA-approved mortgage lender licensed in multiple states across the US. Get to know us and our FHA loan offerings today and receive a free, no-obligation rate quote.
Call us today: (888) 379-0303
Four Landmark Sq. Suite 300
Stamford, CT 06901