FHA Streamline Refinance Pros and Cons
FHA Streamline Refinance – What is it
The FHA Streamline Refinance Pros and Cons aren’t always so obvious. We know the program is tailored to help homeowners save time and money during their refinance process.
The program requires less documentation and time than most traditional refinances, and homeowners often don’t have to verify their employment or income. In addition, checking credit scores is rarely part of the equation.
The major variance of the FHA streamline refi, however, is that the FHA doesn’t require a home appraisal to refinance.
FHA Streamline Refinance Pros
As touched on, there’s more than one reason homeowners love the FHA Streamline Refinance. Bottom line, it’s set’s out to save homeowners money.
A home appraisal is needed, making it an absolute hit. With no credit check or employment verification, it’s also very simply to qualify, especially when compared to a traditional refinance.
So what could go wrong?
FHA Streamline Refinance
Pros and Cons
The major burdens of a streamline refinance are having to pay mortgage insurance premiums and closing costs.
When you take out a new FHA loan, they must pay upfront mortgage insurance again. If your loan-to-value is higher than 78%, you will have to pay annual mortgage insurance premiums.
You won’t be able to finance closing costs into the new loan so you’ll be forced to use cash to cover it. Many lenders offer a “no-closing cost loan” but this could end up costing a fortune in the long run, thus should be considered carefully.
Do your research! If considering a FHA streamline refinance, be sure to compare options for refinancing into a traditional loan to see which mortgage results in the lowest costs to you.
Who Qualifies for an FHA Streamline?
To qualify for an FHA streamline refinance, your loan must be insured by the FHA. This is a major qualification, and there are usually no exceptions.
You must have also made all your mortgage payments on time for the last twelve months in order to qualify. And if you’ve previously refinanced, you will have to wait a minimum 210 days from closing date to apply for an FHA streamline refinance.
You can’t use a streamline refinance to cash out the equity in your home and your loan balance can’t be increased as a result of the refinance.
According to the federal guidelines, a streamline refinance has to result in one of the following: a reduction of your monthly payment or the conversion of an adjustable rate mortgage to a fixed-rate loan.
Is an FHA Streamline Refinance Right For You?
Despite some drawbacks, the Streamline Refinance is designed to save you money. Believe you could save with an FHA Streamline Refinance? If you meet necessary criteria, be sure to take advantage of today’s low rates!
Check out what the nation’s top trusted lenders have to offer, and let them compete for your best rate!