January 20th, 2017 5:02 AM by Jackie A. Graves, President
The term “streamline mortgage” sounds too good to be true,
doesn’t it? Maybe you’ve heard it slipped into conversation by a suave
lender or mortgage broker and got to wondering: What is a streamline mortgage, anyway? Could
it just be some sexy wording that advertising wonks cooked up to get our
attention, or is it a real thing?
The good news is that
streamline mortgages actually exist, and as their name suggests, they can
fast-track your financing so it’s a breeze. But they’re not for everyone—so
before you get your hopes up too high, let’s take a look at what
The most important thing to
understand about the streamline mortgage is that it’s not an option for a new
loan, but rather for refinancing a home loan you already
have. Streamline programs are designed to help you quickly and easily take
advantage of lower interest rates that may have become available since you took
out your original loan.
“Many lenders offer
‘streamlined’ alternatives to existing borrowers to lower costs and
make refinancing more accessible,” explains mortgage expert and journalist Colin Robertson, who publishes the website thetruthaboutmortgage.com.
Basically, the reason this
option exists is that while many people think of refinancing to save money, a refi also costs money upfront—largely to process all the
paperwork. That financial hit and the procedural hassle can deter many from
going down this road, even if it’s smart for the long
term. A streamline mortgage solves this problem by taking a few
For a streamline mortgage,
generally you don’t have to use the same lender as you did for your original
loan. That said, your original lender might make the process even easier (and
cheaper), just to keep your business.
mortgages come with limited paperwork,” says Robertson. Some of the
perks of the typical streamline refinance include:
If you already have an FHA
mortgage, you’re in luck! The Federal Housing Administration has a
short and sweet streamline mortgage program that will lower your interest rates
and payments quickly and efficiently. You just need an FHA-approved lender
(and yes, it can be a different lender than your original).
The FHA also has another
streamline mortgage product that will help you modify or improve
your home. It’s called an FHA Streamline 203(k) Loan, and it will
make anywhere from $5,000 to $35,000 available to repair, upgrade, or
weatherproof your home.
But as with everything in life,
there are a few catches. You can’t just walk up to a lender the
moment interest rates drop and say, “I want a streamline refi.” While
all lenders have their own list of stipulations, they usually include
the streamline mortgage is not just some slick Madison Avenue hype, but a
legitimate way to refinance faster, and with fewer hoops to jump through. Talk
to a lender or mortgage broker if you feel this option might be right for you.