April 16th, 2015 8:37 AM by Jackie A. Graves
an FHA loan with a rate that's beyond what you'd pay today? Have yet to
refinance because you think you're not a candidate? You're paying too much,
plain and simple. And the streamline refinance may be everything you didn't
know you needed to improve your loan - and your bank balance.
FHA Streamline Refinance is a special mortgage product, reserved for homeowners
with existing FHA mortgages," said The Mortgage Reports. "FHA streamline refinances are
the fastest, simplest way for FHA-insured homeowners to refinance their
respective mortgages into today's mortgage rates."
a nutshell, a streamline refi can lower your rate, and therefore your payment,
without going through any tedious approvals. It's a simple process with little
effort needed on the part of the borrower, and it applies to those who may not
qualify for other refinancing programs because of a change in job status or a
poor credit score.
streamline refinance offers several advantages for homeowners who are looking
to save on their mortgage," said smartasset. "With no credit check or employment
verification required, it's relatively easy to qualify compared to a
people with an FHA loan may not have received the most favorable rates when
they purchased because of their combination of credit score and down payment.
In a typical scenario, a borrower could lower their initial interest rate from
4.75 to 3.75 after a minimum of six months by doing a streamline refi and save
hundreds of dollars per month. In addition, a streamline refinance can help borrowers
take advantage of a new rule for 2014 and beyond that reduced Private Mortgage
Insurance (PMI) fees; this will lower their monthly payments even further.
existing loan's MIP is 1.35 percent of the loan amount each year, while your
new loan will have an MIP of just 0.85 percent thanks to the recent rule
change," said The Mortgage Reports. "That change saves you about $500
per year for each $100,000 of your loan amount."
is also no appraisal needed for a streamline refi, so the value of your home
today is essentially irrelevant as it relates to the approval. Even if you owe
more than it's worth, you can still qualify.
FHA streamline refinance program's defining characteristic is that it does not
require a home appraisal. Instead, the FHA will allow you to use your original
purchase price as your home's current value, regardless of what your home is
actually worth today," said The Mortgage Reports. "In this way, with
its FHA streamline refinance program, the FHA does not care if you are
underwater on your mortgage. Rather, the program encourages underwater
mortgages. Even if you owe twice what your home is now worth, the FHA will
refinance your home without added cost or penalty."
there are no approvals and appraisals, there are a few qualifications:
You have to be current with your
You have to wait six months from the
date of your home purchase
You can't take cash out.
"The streamline refinance must
reduce your mortgage payment by at least 5 percent," said HSH.com.
of the loan
any mortgage, streamlined refis have closing costs; these can range between
$1,500 and $4000, according to My Mortgage Insider. But that doesn't mean the borrower has to
pay for them out of pocket.
want your business," they said. "Loans with streamlined processes are
in high demand. They take lenders less time and manpower to get through the
system compared to other loan types." Because of this, lenders will often
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