If your mortgage loan is insured by the Federal Housing Administration, an FHA streamline refinance could be an option.
Streamline refinancing allows you to get better mortgage terms without much of a hassle. There’s no extensive qualification process – the process is easier and faster, with minimal paperwork, no income verification and often no appraisal. Taking advantage of this FHA program can save you time and money.
However, to be eligible for an FHA streamline refinance, you’ll need to meet certain guidelines. Here’s what you need to know before applying for mortgage loan refinancing.
Mortgage Closing Date
How long have you had your existing mortgage?
Your current home loan must be in place for a minimum of 210 days to qualify for a streamline refinance. In addition, you must have at least six monthly payments under your belt.
Mortgage Loan Status
Have you missed or been late on any of your mortgage payments in the last twelve months?
If so, you may be ineligible for streamline refinancing. The FHA offers an exception for those with home loans under a year old who have not missed any payment deadlines by more than 30 days, but lenders often deny applicants who have delinquent payments.
Mortgage Refinance Benefit
What do you have to gain from home loan refinancing?
The FHA requires there to be a benefit to the borrower. A lower monthly mortgage payment is not enough if it is only the result of increasing your term – in that case, you may end up paying more overall. To qualify for a streamline refinance, the program needs to save you money by either providing you with a lower interest rate or by shortening the amortization period of your current mortgage.
Mortgage Lender Terms
Is an FHA streamline refinance a smart financial move for you?
Calculate your long-term savings to see if home loan refinancing is really in your best interests. And be aware, not all mortgage lenders offer the same terms for FHA loans. Shopping around is the best way to ensure your streamline refinance has the best possible interest rate and most favorable loan terms.
Mortgage Refinance Costs
Do you have cash on hand to cover the closing costs and mortgage insurance premiums?
With an FHA streamline refinance, you usually cannot incorporate the closing costs into the new home loan. Some lenders offer zero-cost refinancing, but the higher interest rate over the life of the mortgage may negate any benefits. And as with your existing FHA loan, you must continue to pay for mortgage insurance – and the premiums could be higher.
Is streamline refinancing right for you? For expert help comparing your options, turn to the professional team at Intercap Lending.
Based in northern Utah and serving homeowners throughout the state, Intercap Lending makes shopping for and securing a refinance loan an easy, stress-free process. We’re always happy to offer advice on home refinancing, and with our decades of experience, we’re sure to find a solution that meets your needs.
For more information on refinancing a home loan, or to discuss the FHA streamline refinance program with the Intercap Lending team, contact us today.