Q&A: What Is FHA Streamline Refinance?
Q: I’ve heard that a Streamline Refinance through the FHA can be easier to qualify for — what is FHA Streamline Refinance and how do I find out if I’m eligible?
A: The FHA “Streamline” refinance option is referred to as such because it allows mortgage borrowers to fast-track the process, namely by providing the option to use the original appraisal value rather than acquiring a new appraisal. Streamline refinancing also requires a lot less documentation and paperwork, and can provide even lower interest rates than traditional refinancing options.
In order to qualify for Streamlined Refinance, your original loan must be:
- Backed by the FHA
- In good standing at the time of refinance
- Refinanced to lower your monthly interest payments by at least 5
percent, or convert an adjustable rate mortgage to a fixed-rate mortgage
Note there is no option to receive cash back through FHA Streamline refinancing. Additionally, if you choose the no appraisal option, you are not allowed to roll closing costs into the loan. Be prepared to pay those costs up front, or pay a slightly higher interest rate in exchange for your lender covering them instead.
FHA Streamline refinancing can be a helpful option if you can’t qualify for traditional refinancing, especially because your mortgage is underwater (you owe more than your home is worth). However, it’s always important to crunch the numbers and ensure a refinancing makes sense mathematically.
Keep Reading: How to Calculate How Much Refinance Rates Today Might Save You on a MortgageSource: www.gobankingrates.com