FHA Streamline Refinance
Are you thinking about refinancing your mortgage? It's not always that easy, but many lenders now offer alternatives to existing borrowers that can lower costs and make it easier to refinance. Many banks have their own programs that reduce the credit score requirements and paperwork. In some cases, you won't even need an appraisal for refinancing your mortgage.
What this means, generally, is that refinancing your mortgage will help you by dropping the rate in such a way that the fees are covered, and the loan is transformed from an adjustable rate to a fixed rate mortgage.
Here are the guidelines for a streamline refinance:
- It must be current on your existing mortgage
- No cash out
- Limited asset and income verification
- Must benefit you as a borrower
- Minimal credit requirements
- Faster processing
- Less paperwork
- Lower closing costs
- No appraisal
Bear in mind, of course, that guidelines can vary from lender to lender, and not every lender offers streamline finance. If it is offered, it's not guaranteed that you'll be approved.
FHA Streamline Refinance
One of the best-known and most popular streamline refinance options available is from the FHA. They've actually permitted streamline finances for nearly 30 years. With an FHA streamline refinance, you can get a lower rate with no need for an appraisal - and realistically, appraisals can be pretty low in today's market.
Additionally, with FHA streamline refinance, your credit score isn't an issue and you don't need a whole lot of documentation. Even if your income, employment or assets are substandard, you can still qualify. The theory is that if a borrower has lower payments, then he or she is by definition less of a risk.
As long as your current mortgage is an FHA loan in good standing (meaning that you haven't missed any payments), you can get a lower monthly payment. These are the only requirements:
- You have to have made a minimum of six payments on your FHA loan before financing.
- Six months have to have passed since the first payment on your original mortgage.
- 210 days must have elapsed from the closing date of your original mortgage.
If all that is in order, you're good to go.
The biggest benefit here is that if you're "upside down" in your FHA loan, meaning that you actually owe more than your house would be considered to be worth if it was appraised, you still qualify - because there's no appraisal! In hard economic times, people often aren't able to keep up the maintenance on their homes, and they drop in value. But because your home doesn't have to be appraised under streamline refinancing, this is a non-issue.
VA Streamline Refinance
The VA also offers a streamlined refinancing your mortgage option, known as an Interest Rate Reduction Refinancing Loan (IRRL) or VA to VA loan. The rules are essentially the same as they are under the FHA streamline refinance. The VA also doesn't require an appraisal. You don't even need a certificate of eligibility.
HARP Streamline Refinance
This is another program that allows refinancing your mortgage, even if they're upside down. However, to qualify for the HARP streamline refinance, your home loan must be owned by Freddie Mac or Fannie Mae, and must have been sold to one or the other before May 31 of 2009. You must be current, and have had no late payments within six months, and no more than one late payment in the previous year.
Is Streamline Refinance a Good Deal?
Generally speaking, yes, it is. But of course it's always wise to shop around, look beyond your current lender, and find out what else is out there. You might be able to find a better rate with a new lender that would make a more difficult qualification process worthwhile.