Top 10 FHA Streamline Refinance Benefits
An FHA streamline refinance has many benefits and is an excellent way to refinance your home with less documentation and lower closing costs. If you currently have an FHA loan, it may be worth looking into an FHA streamline refinance.
Top 10 FHA Streamline Refinance Benefits
These are some of the benefits and reasons why you may consider an FHA streamline refinance:
1. No Income Documentation
One of the main benefits of the FHA streamline refinance is not having to document your income. This means no pay stubs and no tax returns. It also means there will be no DTI calculation to determine whether you make enough to qualify for the new mortgage.
2. No Verification of Employment
There will be no verification of employment with an FHA Streamline mortgage. This can be helpful if you are currently unemployed or cannot verify your employment.
3. Lower Closing Costs
Although there are closing costs associated with an FHA streamline refinance, you will not have to pay for the cost of an appraisal.
4. No Credit Check
There is no credit check requirement which helps if for some reason your credit scores have dropped since your original mortgage application. However, if your scores improved, you can ask the lender to pull credit and take that into consideration.
5. No Appraisal Needed
There is no appraisal requirement and the lender will use the original purchase price as the value of the home. This helps if your home value has declined to the point where your loan may be higher than your home value.
6. Lower Interest Rate
The main benefit of refinancing is to get a lower interest rate. There should be thousands in savings over the life of the loan.
7. Lower Payments
The refinance in most instances will result in lower payments usually due to having a lower interest rate. However, it is possible for your payments to increase if you are refinancing to a 15 year FHA loan.
8. Faster Closings
The FHA streamline refinance comes with faster closing times due to having fewer documents to collect and no appraisal.
9. Refinance for a Different Loan Term
If you have an adjustable rate, you can refinance to a fixed rate which will provide you with rate stability. This is helpful at a time when rates are low with greater potential for them to increase over time.
10. Lower Mortgage Insurance Premiums
If you have paid down the down significantly since your original purchase, there is a chance that your new FHA mortgage insurance premium could be lower than what you are paying now. One of the factors that determines the monthly insurance payment is the loan to value ratio.
Initial FHA Streamline Refinance Qualifications
Before you consider refinancing with an FHA streamline refinance, you must meet all of these qualifications:
- Your existing loan must be an FHA loan. Only FHA loans can be refinanced with an FHA streamline refinance. If your current loan is a conventional or some other type of mortgage, you can refinance with an FHA loan but it cannot be the streamlined version.
- There must be a net tangible benefit. FHA guidelines require there to be a benefit to the borrower when refinancing. Examples are lower payments, lower interest rates, or a better loan term.
- No missed mortgage payments. FHA guidelines do not allow FHA streamline refinances if the existing loan has any late payments within the past six months or more than one late payment in the past 12 months.
If you are considering an FHA Streamline Refinance, let us help you with a quick quote from one of our FHA lenders without a credit pull. Just complete this short quote form.