Is an FHA Streamline Refinance Worth your Consideration?

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The FHA streamline refinances program comes in handy for current FHA homeowners since it minimizes their monthly payments and interest rates. It is also a cost-effective and quick way to refinance since only a few documentation requirements are needed. 

When choosing a lender, you need to assess their current fha streamline rates and will help you save some money in the long run. With an FHA streamline program, an HFA homeowner can lower their credit standards and documentation needed. 

Should you consider an FHA streamline refinance?

Generally speaking, considering an FHA streamline is a good idea, especially with the lower monthly payments and interest rates. Otherwise, if the loan is unworthy, it does not benefit you. Compared to conventional loans, streamline refinances come with several perks. 

These could include: no documentation required such as W2s and pay stubs, lower interest rates, no appraisal required, efficient closing times, underwater homes could be eligible, and also, you could be potentially eligible for a partial refund from your original loan. 

Since no appraisals are needed as mentioned above, your Loan-to-Value ratio is calculated based on the previously appraised value when you go to the current loan. 

Some of the requirements you need to meet to qualify for an FHA Streamline refinance include:

On-time payment history

To qualify for an FHA loan, proving a history of on-time mortgage payments is essential. Late payments could lead to disqualifications. For that reason, you need to work on your credit history so you can qualify for an FHA streamline refinancing following your second most recent late payment. 

Net tangible benefit

For the borrower, all FHA streamline refinances need to result in a Net Tangible Benefit. That means that the refinance needs to improve your financial position as stipulated by the Federal Housing Administration. 

Waiting period

Between the period you can refinance and when you first closed your loan there is a waiting period. That means that if you just closed your loan, you may not be eligible for an FHA streamline refinance. Some of the waiting period requirements include: waiting at least 211 days since the day your current mortgage closed, have made at least six on-time payments on your existing FHA mortgage, and at least six months since your first payment due date. 

Minimum credit score

The good news is that you don’t require a credit report to qualify for an FHA loan. Although, in some instances, a lender may require that you produce one. Some of the factors that may impact your credit score include payment history, outstanding credit balances, and the type of credit. 

Closing costs for FHA streamline refinance

The closing costs on streamline refinances are nearly similar to other mortgages, although there is no appraisal fee. You may also be required to meet a portion of insurance at closing and property taxes. 

If you run short of cash, you can always ask your lender if they issue lender credits, even for a higher interest rate. Also, with equity in your home, with an appraisal, you can wrap closing costs into the new loan amount.

Choosing a lender

When choosing a lender, there are several factors that you need to consider. Some of these include:

  • Customer service

When choosing a lender, you need to consider their customer service levels. The ideal lenders have outstanding customer service and are known to offer the best services to their clients. They should be responsive to calls, emails, and any other forms of communication. 

  • Reviews

Another way to identify the best lenders is by reading their reviews. Check their website, Google reviews, and social media platforms to assess how people rate their services. Always consider one with positive reviews because it means that there are services that are worth your consideration.

You can also ask trusted family members and relatives for recommendations.

  • Super low rates

Finally, consider a lender who offers super low rates for their FHA loans. That helps to save you so much money in the long run. Also, consider a lender with award-winning expertise.

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