FHA Streamline Refinance

2007-09-25 14:12:16

( Financial )



An increase in homeownership in America is the goal best accustomed to FHA loan program. To better support this, the company permitted a loan refinance that allows homeowners to avail of lower interest rates. In effect, lowering their monthly payments. Created in the 1980’s, this is called the FHA streamline refinance.

FHA streamline refinance means that there will be lesser paperwork, appraisal and underwriting qualifications to be completed by your lender, thereby saving time and money. It doesn’t imply that transactions will be at no cost. Applicable fees will still be implemented.

This is a smart choice among many because you can refinance without shelling out money out of your pocket for the time being. Either you let the lender cover the closing cost in exchange of a slightly higher interest or you include the closing cost in the new loan should the property has enough equity. This is determined by an appraisal.

Without an appraisal, the new loan should not go over the existing amount owed. Note also that FHA refinancing options are ideally for homeowners currently using their home as principal residence. Should the borrower reside elsewhere and the asset considered an investment property, refinancing without appraisal is the only way to go. In this case, closing costs may not be included in the new mortgage amount.

To initially qualify for an FHA streamline refinance, the mortgage to be refinanced must be FHA insured and existing. Delinquent mortgages are not encouraged. The loan should been opened by the borrower at least six months before refinancing. This refinancing option should reduce your interest rate and monthly payments but cash may not be taken out using this process.

Aside from lower interest rate and monthly payments, FHA streamline refinance gives you the benefit of shorter amortization schedule and fixed mortgage rate security. Choose from the different types of programs available and select rates and fees that best suit your needs.


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