The FHA streamline refinance program exists to help homeowners who may be “underwater” on their mortgages or have less than ideal credit, refinance their mortgages. Homeowners may qualify if they meet certain basic FHA streamline refinance requirements, such as:
- Initial mortgage must be through the FHA.
- Existing mortgage cannot be delinquent. Further, you cannot have had more than two, 30-day late payments within the previous year.
- Refinance cannot be used to “cash out” equity in the home.
- Borrowers must live in the home they are refinancing.
One of the beauties of this program is that it reduces the documentation required to close on the loan. It does not, however, negate the need for closing costs in all situations.
Benefits of Streamline Refinancing
Homeowners considering an FHA streamline refinance loan may enjoy a wide range of benefits from their decision to refinance, depending on your specific credit and financial situation, including:
- FHA streamline closing costs are not always necessary. Some lenders will waive the closing costs if you meet certain requirements and/or pay higher interest rates.
- Lower monthly payments. This can be accomplished in two ways. First, by extending the length of your loan to a full 30 years, using any equity you have in your home to reduce the total amount owed. Second, by potentially lowering your interest rate allowing you to pay less, overall, for the home.
- Shorten the length of your loan. Using the equity in your home, combined with reduced interest rates allows you to repay your mortgage faster, reducing your total cost of ownership. Just make sure there is no penalty for early repayment.
Interest rates are on the rise. Don’t sit on the fence long enough for this window of opportunity to pass you by. Learn more about the FHA streamline program today.