What is an FHA Streamline Refinance mortgage?
What is an FHA Streamline Refinance?
The Federal Housing Administration (FHA) streamline refinance is a no appraisal, no income verification mortgage refinancing process for borrowers who currently have an FHA loan.
An FHA Streamline refinance is designed to help homeowners lower their monthly mortgage payments by lowering their interest rate and or reducing the cost of FHA’s annual monthly mortgage insurance.
In this article, we'll discuss eligibility requirements and the monthly savings you can capture by using an FHA streamline refinance.
If you're considering an FHA Streamline Mortgage Refinance, it's essential to understand the benefits, how it works, the eligibility requirements, documents needed, closing costs, and how to apply.
What are the Benefits of an FHA Streamline Refinance?
The benefits of an FHA Streamline Refinance are:
- Lower Monthly Mortgage Payments: One of the most significant benefits of an FHA Streamline Refinance is that it can help you lower your monthly mortgage payments by taking advantage of lower interest rates and or monthly mortgage insurance premiums
- No Appraisal Required: Unlike a normal refinance, an FHA Streamline Refinance doesn't require an appraisal
- No Income Verification: An FHA Streamline Refinance doesn't require income verification. However, you must still have a source of income
- Lower Fees: An FHA Streamline Refinance has lower fees than a conventional mortgage refinance
- No Credit Check: An FHA Streamline Refinance doesn't require a credit check. However, you can not have any 30 day late mortgage payments in last 12 months
How does an FHA Streamline Refinance Work?
An FHA Streamline Refinance works by replacing your existing FHA home loan with a new FHA-loan that provides you a lower interest rate and or monthly mortgage insurance premium.
Therefore, new mortgage will have a lower interest rate and or mortgage insurance policy, which will lower your monthly mortgage payments.
What are the FHA Streamline Refinance Requirements?
It is very easy to qualify for an FHA Streamline mortgage refinance. The Federal Housing Administration has designed this program to reduce the cost, and documentation required to lower your payments.
Requirements for FHA Streamline Approvals
- You have an existing FHA-insured mortgage
- No 30-day late payments on mortgage in last 12 months
- The payment savings from your old loan to your new loan, meets the FHA Net Tangible Benefit test. This verifies the mathematical savings for you.
- No real estate appraisal requirements
- No income verification. Must still have source of income
- No Cash out available
- New Loan Amount can not exceed FHA County Loan Limit
What Documents are Needed for an FHA Streamline Refinance?
The documents needed for an FHA Streamline Refinance are minimal and provided in the list below.
- Current Monthly Mortgage Statement to verify payment savings eligibility
- Copy of your Driver’s License
- Copy of your Homeowners Insurance Declaration page
- Mortgage Only credit report to verify mortgage payment history
- Initial signed FHA Streamline loan disclosures
What are the Closing Costs for an FHA Streamline Loan?
The closing costs for an FHA Streamline Loan are lower than the majority of other loan programs.
Closing cost are reduced because the streamline guidelines reduce the lenders work to originate, close, and fund your FHA streamline loan.
The closing costs for an FHA Streamline Loan can include:
- Upfront Mortgage Insurance Premium (UFMIP): The UFMIP is a one-time fee that's required for all FHA-insured mortgages. The UFMIP can be financed into the new mortgage.
- Annual Mortgage Insurance Premium (MIP): The MIP is an ongoing monthly fee that is included in your monthly payment.
- Loan Origination Fee: The loan origination fee is a fee charged by the lender to process the loan.
- Title Fees: Title fees include the cost of the title search, title insurance, and other related fees.
- Other Fees: Other fees can include credit report fees, flood certification fees, and recording fees.
- UpFront Mortgage Insurance Refund: If your existing FHA loan is less than 36 months old, you will receive a prorated refund for the unused portion of your previously paid monthly mortgage insurance premium.
How to Apply for an FHA Streamline Refinance?
Steps to Apply for an FHA Streamline Loan
- Contact a Lender: You'll need to contact a lender that offers FHA Streamline Refinances or you can use our Digital Mortgage Marketplace that will identify the lowest rate and fee lender for you.
- Provide Documentation: You'll need to provide the lender with the required documentation, including proof of income, mortgage statement, and homeowners’ insurance.
- Review Loan Options: Your lender will provide you with loan options and help you determine if an FHA Streamline Refinance is right for you.
- Sign Documents: Once you've decided on a loan option, you'll need to sign the loan documents.
- Close on the Loan: After you've signed the loan documents, you'll need to close on the loan. This can be done at the lender's office or through a mobile notary.
Summary of FHA Streamline Mortgage Refinance
In conclusion, an FHA Streamline Refinance is a great option for homeowners who have an existing FHA-insured mortgage and want to lower their monthly mortgage payments.
You can lower your monthly payments when interest rates drop and or when FHA lowers the cost of the monthly mortgage insurance premium,
The FHA streamline process offers lower fees, simplified loan approvals, minimal documents and relaxed underwriting guidelines.
FHA streamline is a great option for those who are looking to save money on their mortgage.
If you are considering an FHA streamline to lower your monthly payments, than we invite you to call and talk with us or simply apply online and see how much you will save.
