One of the most consumer-friendly government refinances available is the FHA streamline. An FHA streamline is a refinance from one FHA mortgage to a better, lower rate FHA mortgage.
Here are some of the features of FHA streamlines:
- No appraisal required
- No equity required — the home can be massively underwater and still qualify
- No debt-to-income verification required
Here are the main requirements to qualify for an FHA streamline
- Must have an FHA loan now (as opposed to a conventional mortgage — check your mortgage paperwork if you aren’t sure what type of loan you have now)
- No more than one 30 day late payments on your mortgage in the last 12 months
- If bankruptcy has occurred, it must have been discharged for at least one day
- Verification of employment or at least some income source
The age of the current FHA loan
For FHA loans that were originated in the spring of 2009 or earlier there are special FHA streamline benefits that include the FHA waiving their up front mortgage insurance fee and not increasing the monthly mortgage insurance at all. Streamlining FHA loans that started after the spring of 2009 requires an increase in the monthly mortgage insurance and other fees.
Done right, an FHA streamline should be virtually free
For FHA loans that were started prior to the spring of 2009, streamlining is nearly always a good idea. Interest rates now are lower than they were then and the FHA streamline program is essentially a free way to lower your interest rate and monthly payments significantly. The FHA does not allow closing costs from authorized lenders or title companies to be rolled into your new FHA loan so the authorized lenders on our list normally cover those costs for you with a lender credit. Plus you normally skip at least one monthly payment as part of the streamline process and get a refund on the money in your current escrow account, so the process also puts money in your pocket in the short run.
For FHA loans that originated more recently than the spring of 2009, most of the same benefits still apply. The difference in the FHA requires an up front fee which is rolled into the loan. The FHA also requires a higher monthly mortgage insurance going forward. As a result, for streamlines of more recent FHA loans you normally need to lower your interest rates pretty significantly to have the streamline make sense. Contact us to get help running the numbers for you on that.
Contact Us Today
If you have an FHA loan, contact us today by filling in the contact form on the right to get an estimate. With interest rates on FHA loans still near historic lows, an FHA streamline is often massively beneficial to families who have FHA loans now.
(See here for former news stories about FHA streamlines)