The FHA Streamline Refinance is a quick and easy way for borrowers. They can access reduced interest rates and lowering monthly mortgage payments. The borrower’s credit score isn’t an issue when it comes to approval. There is no requirement for income verification, but you must have at least 12 months of homeownership under your belt.
As such, this type of refinancing is most popular among homeowners. Homeowners who plan to stay in their residences for a shorter period. If you search for a quick and easy way to lower your rate, contact a Florida mortgage company. Also, read on to know the advantages, disadvantages, and rates of the FHA Streamline Refinance.
What Is An FHA Streamline Refinance?
The FHA Streamline refinance is a way for homeowners to get a new, lower fixed-rate mortgage with the same lender. The streamline program is popular because it can help homeowners save money on their monthly mortgage payments by getting new Florida mortgage loans at a low rate with no out-of-pocket expenses.
A homeowner is eligible for an FHA Streamline to refinance if they have not taken cash from their home’s equity in the last three years. Or have not refinanced within the last year, and do not have more than 15% equity in their home.
The borrower must also have a current FICO score of at least 580 to qualify for the streamlined refinance. So, what does that exactly mean? How can you find out if you are eligible? Keep reading to learn more about FHA Streamline refinance and how it works.
What Are Some Of The Benefits Of An FHA Streamline Refinance?
Streamline refinances are not typically available for more than 90 days late properties. It has a track record of missed payments or are rented. They do, however, come with several advantages for homeowners. Here are the benefits of refinancing with an FHA Streamline loan:
- The entire process is streamlined and straightforward.
- Qualifying for the program typically takes less than 48 hours. After you submit all of your information online, you will be contacted by a Florida mortgage lender to review your application and see if you are eligible to refinance through this FHA program.
- You may not have to provide income documentation.
- Streamline refinance loans require no appraisal.
- The FHA streamline refinances a way to lower your interest rate and monthly payments potentially.
How Does An FHA Streamline Refinance Compare To A Conventional One?
There are few significant distinctions between these two types of refinances.
Eligibility
To qualify for a conventional refinance, you must have a current, fixed-rate FHA loan, but an FHA streamline can be applied to either fixed-rate or adjustable-rate mortgages. It’s also possible for borrowers who have less than perfect credit to qualify for an FHA streamline, while most conforming loans will require a score of at least 620.
Documentation and Paperwork
Another difference between the two types of refinancing is that there are no closing costs or fees with an FHA streamline refinance. In contrast, a conventional loan may require paying appraisal fees and tax service charges.
Interest rates
Conventional loans are based on current market rates, whereas FHA refinances are restricted to FHA-approved lenders, which can limit your options. This means that you may not find the best interest rate on a conventional loan, but you will have more flexibility with an FHA streamline.
What Are Some Of The Disadvantages Of An FHA Streamline Refinance?
Your credit score may need to be increased
While the minimum credit score is 580, some lenders may require you to have a higher score to refinance your loan.
There is a 1% funding fee
An FHA streamline requires borrowers to pay either an upfront fee or monthly premium depending on the lender, which will increase your closing costs. However, the funding fee is typically 1% of the loan balance, so it usually won’t have a significant impact on your closing costs.
You must have at least 20% equity in your property to be eligible
You must have at least 20% equity in your home to refinance through the streamlined program, which means that you will need to make significant payments towards your loan or catch up on past-due payments to be eligible. If you are behind in your mortgage, this may not be the right refinance option for you.
You cannot get an FHA streamline refinance to purchase a new home
If your goal is to purchase a new home with an FHA streamline refinance, it’s not going to happen. You can only use an FHA refinance to lower your monthly payments, reduce your interest rates and fees, or pay off a different high-interest rate loan.
You cannot combine your FHA streamline refinance with other loans
If you have other loans to pay off, you cannot combine them into one loan with an FHA streamline. However, if you are looking for a refinance program that can handle multiple loans or mortgages with one application, talk to your lender about combining your FHA streamline with a conventional refinance or home equity loan.
What Is The FHA Streamline Refinance Rate?
The FHA streamline refinance rate is typically lower than a conventional loan, which will save you money with each payment. However, the FHA streamline program does not allow for cash out, so your options may be limited regarding how much you can reduce your interest rates and payments. Nevertheless, an FHA streamlines refinance is an excellent choice for people who can lower their interest rates, pay off a high-interest rate loan, and improve their credit score with a single refinance.
What Are The Required Minimum Monthly Payments For An FHA Streamline?
You must make monthly payments greater than or equal to the monthly amount due when you first obtained your FHA-insured loan. This means that if you have a 30 year FHA loan in Florida, you will need to make at least the same payment for a 15 year FHA streamline refinance.
Tips: Also, read about USDA and FHA loans to determine which one is better for you.
Conclusion
An FHA streamline refinance is an excellent option for homeowners who may not qualify for a conventional loan. You must meet the basic FHA requirements, and your mortgage must also be at least 90 days past due to be eligible for an FHA streamline refinance. An FHA streamline will only lower your monthly payment amounts, so you have to have enough equity in your home to take advantage of this loan option. Contact Florida mortgage company to get the best deal and take advantage of FHA streamline refinance.
