If you have an FHA mortgage and are looking to refinance, the FHA Streamline Refinance program could be an ideal option. This program simplifies the refinancing process, allowing you to potentially lower your interest rate and monthly payment without the extensive documentation typically required. Here’s what you need to know to decide if it’s right for you.

What Is FHA Streamline Refinance? FHA Streamline Refinance allows homeowners with existing FHA loans to refinance to a new FHA loan with less paperwork and no appraisal required. The main appeal of this program is its simplicity and speed. Homeowners can benefit from reduced paperwork, no income or employment verification, and no home appraisal.

Types of FHA Streamline Refinance:

• Noncredit-Qualifying: Most homeowners opt for this, enjoying the benefit of not needing to verify their income or credit score.
• Credit-Qualifying: This option might be necessary if there are significant changes to your financial situation or if you’re removing someone from the mortgage.

Key Benefits:

• Potential for lower monthly payments.
• Option to convert from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage.
• Simplified process with less documentation and no appraisal required.

Eligibility Criteria:

• Must already have an FHA loan.
• No late mortgage payments in the last 12 months.
• A waiting period of at least 210 days from the original loan closing date.
• Demonstrable net tangible benefit, such as a reduction in the interest rate or change from ARM to a fixed-rate loan.

Considerations for Refinancing:

 

• Impact on Mortgage Insurance: You’ll need to pay a new upfront mortgage insurance premium, although you might get a refund of the premium from your original loan if it’s within three years.

 

• Closing Costs: You must have cash on hand for closing costs, as these cannot be rolled into the loan amount, except for the upfront mortgage insurance premium. HOWEVER, you can potentially “skip” one mortgage payment, the funds from your escrow account get refunded to you, and you get a refund towards your FHA funding fee. Funds essentially get moved around.

Finding the Best Rates: A mortgage broker can rate shop across dozens of lenders that will compete for you loan at wholesale prices. You only need to apply and run credit once with a mortgage broker. Discuss with you mortgage professional if you want to lock in or float the interest rate. Locking in means you commit to the rate, and floating means will allow the rate to adjust with the market. The loan must be locked in about two weeks after the loan is disclosed, in order to get the closing disclosure released, a milestone that indicates you are close to closing your loan.

Take Action: If you’re considering an FHA Streamline Refinance, now might be the perfect time to explore your options and potentially reduce your monthly mortgage payment. Contact me to discuss how this program might fit your financial goals and to get started with the application process. I will create a tailored quote based on your specific loan scenario.

Chenine Lozano, Real Estate Finance Expert
W: (562) 620-7662
C: 562-762-7511
NMLS #1655101 DRE#02069548
Endeavor Mortgage NMLS#355050