While recent FHA policy changes eliminated some of the benefits of FHA streamline loans, the FHA streamline program is still running and still has some real benefits. Here are some of those benefits:
– FHA streamlines still allow for homeowners who are underwater on their FHA mortgages to refinance to a better rate without requiring an appraisal
– FHA streamlines require more paperwork than they used to but still require significantly less paperwork than traditional refinances
The biggest difference for FHA streamlines going forward is that they will normally require some money at closing because FHA is no longer allowing escrow prepayments, title fees, or bank fees to be rolled into the new FHA loan. Usually the best way to deal with this is to close the FHA streamline loan near the end of the month and to bring the normal mortgage payment due the next month to the closing. So for instance, for an FHA streamline closed in January the borrower would make the normal January payment at the start of the month and then bring the February payment to closing on, say, the 26th of January. With the February payment made the first payment on the new FHA loan would be due in March.
Of course each situation is different and in some cases we as the federally-chartered lender would be able to foot the bill for some of the closing costs.
The primary point is that FHA streamline program is still one of the best programs available for people who already have an FHA loan and would like a lower interest rate. Contact us today in the sidebar if you have an FHA loan at 5.75% or higher and we’ll see if can help you lower your rate and payments.