Closing Costs for the FHA Streamline Refinance Program
Closing costs may not be the most exciting thing to think about when you refinance your home— but understanding how much they might cost is still important. Overall, closing costs can be expected to range from $1,500- $6,000, depending on the lender, the borrower’s qualifications, and, of course, the size of the loan. Below, we’ve listed some of the most common closing costs for the FHA Streamline Refinance program in order to help you know what to expect.
Loan Origination Fee: Loan origination fees vary from lender to lender, but typically average somewhere between 0-1% of the entire loan amount.
FHA Upfront Mortgage Insurance Premium: FHA upfront MIP is the portion of your mortgage insurance premium that will need to be paid at closing. Right now, FHA upfront MIP is 1.75% of your total loan amount. However, since all candidates for the FHA Streamline Refinance program must already have an FHA home loan, borrowers will usually qualify for a refund that can be applied to their new upfront premium. This refund can vary, but will usually fall somewhere between 10% and 68% of your new upfront MIP charge.
Underwriting Fee: An underwriting fee compensates your lender for doing the work to determine whether you’re eligible for a loan. Underwriting fees can often cost up to $1,000, but some lenders may choose to waive them.
Credit Report: While a credit check is not mandatory under the FHA rules for the Streamline Refinance program, many lenders require one in order to get approved. A credit check fee is typically $35.
Escrow Fees: An escrow account will hold money and any important during the home refinance process. Since this is a refinance, not a purchase, you may not need a traditional escrow account during the closing process, but you will definitely need an escrow account to hold property taxes and other fees while you pay off your mortgage. This account will be set up by your lender, and will most likely not result in additional fees.
Types of Title Insurance: Two types of title insurance exist, lender’s title and owner’s title insurance. Lenders typically require borrowers to purchase lender’s insurance, which is designed to protect the lender in the case that a title problem prevents the borrower from repaying their loan. In contrast, owner’s insurance protects the owner from the financial repercussions of title issues. While owner’s insurance is not required by lenders, it is highly recommended.
Title Insurance Requirements: Even if you had a lender’s title insurance policy on your previous FHA loan, you will still need to get a new one for your FHA Streamline Refinance. However, in most states, you will be able to achieve a reduced rate if the initial lender’s policy was issued in the last 10 yeas. Despite that, if you already have an owner’s policy, you will not need to purchase a new one just because you are refinancing.
Zero Out-of-Pocket Streamline Refinancing
In some cases, borrowers can make it through an FHA Streamline Refinance closing without having to put any cash down. However, this depends on multiple factors, including the flexibility of the lender and the eligibility of the borrower. In many cases, a lender will waive some costs for well-qualified borrowers, and will let them roll other costs into their loan.