Benefits of the FHA Streamline Refinance
This program is popular for many borrowers who currently have FHA loans on their property. Refinancing, in general, is a good option for some homeowners, and you may want to consider the Streamline program if…
You Can Secure a Lower Interest Rate
If mortgage interest rates have fallen since you took out the original FHA loan, it may be wise to refinance with FHA Streamline. However, you may want to work with a professional to sort through the math and verify that your new loan will bring a “net tangible benefit.”
Say you took out your mortgage loan when interest rates were 4.5%. After five years, the interest rates have dropped to 4.0%. Depending on how much longer you have on your mortgage, this drop in rates could result in tens of thousands of dollars worth of savings.
You Need to Refinance, But Your Job Situation Has Changed
FHA Streamline Refinancing is efficient because there is no need to verify your current income or job status. If your income or credit has changed since you took out the mortgage, other programs may create roadblocks to refinancing approval.
Many other refinancing options will require that you reprocess your job status when you seek a new loan, but if you have changed jobs, the refinancing may not be available. With FHA Streamline, you can move swiftly from your current FHA loan to a new FHA loan without going through the meticulous rigors of income verification, which could result in the rejection of your loan.
You Want a Faster Refinance Process
If you need to refinance quickly, for whatever reason, Streamline is a good choice. It can often be completed in a much faster timeframe than any other refinancing option.
If you are expecting to change jobs in the near future, but you also know you’ll need to refinance your home, and want to complete the refinancing before you start the new job, the fast nature of an FHA Streamline Refinancing can help you complete the task quickly so you can move on to other projects.
Your Current Monthly Payment on an FHA Loan is Too High
Although you can refinance with virtually any program you desire, if you are struggling to make payments on an FHA loan, the Streamline option may be your best route. With this program, you can likely get better terms that bring a lower monthly payment, which will likely be considered a net tangible benefit.
Perhaps you have an FHA mortgage with a 15-year repayment plan. Because the total loan plus interest is condensed into 15 years, the monthly payments will be higher than a 30-year mortgage. If you are struggling with the monthly payments, using an FHA Streamline Refinancing to move into a 30-year mortgage will result in smaller, manageable payments.
You Can’t Afford Closing Costs
Refinancing costs money, particularly in the form of closing costs. If you can’t afford the closing costs, an FHA Streamline may allow you to roll the costs into your monthly payment. This significantly reduces the upfront costs that come with using this program, although the price will be spread into your long-term costs.
If you can’t afford the closing costs upfront, some refinancing options may not be available. With an FHA Streamline Refinancing, the closing costs can be simply added to the loan so you pay them over the life of the loan, not immediately.
Your Home Has Likely Gone Down in Value
If your home has gone down in value, it can create difficulties for getting refinancing approval. However, because there is no appraisal for FHA Streamline Refinancing, it may be the best option when a house has depreciated for any reason.
Say you purchased your home for a total price of $300,000. Ten years later, the home has gone down in value to $250,000. The value of the home is important to lenders because they have to know they can recover their funds in the event of a loan default; if the house has gone down, there is more risk to lenders and they may not assist with refinancing. To ensure they are lending on a home that has value, most refinancing requires an appraisal. If your home has likely gone down, you can go with an FHA Streamline Refinancing and skip an appraisal that could result in the rejection of your refinancing application.