With an FHA Streamline Refinance, borrowers are able to take advantage of lower rates often without the hassles of an appraisal, full credit check, or up-front cash payment. That means even those who are lacking in the home equity and credit score departments can reap the benefits of an FHA Streamline Refinance. This is a good option available to borrowers who currently have an FHA loan out on their principal residence and are looking to lower their monthly interest payment. Since the FHA recently lowered the annual MIP for most new loans from 1.35 percent of the outstanding loan balance to 0.85 percent, there is the potential for substantial savings.
Snapshot of Qualifications
Because of the stringent requirements borrowers must meet when first obtaining their FHA mortgage, the Streamline Refinance process is much simpler. The prerequisites for the application process are:
• This loan is for current FHA borrowers only. The FHA requires that you must have made six or more monthly payments on your current FHA mortgage, so you will only qualify if you closed on your loan at least 210 days ago.
• Good payment history. This loan is restricted to borrowers who have made all of their mortgage payments within the month due with no late payments during the past 12 months.
• Employment verification. While the FHA doesn’t require lenders to certify employment and income for this type of loan and will not need to see copies of your W2s or paystubs, your particular lender may request proof that you are currently employed and earning an income.
3 Appealing Features
Borrowers wishing to lower their monthly payments or transition from an adjustable to a fixed-rate loan will enjoy the following features of the FHA Streamline Refinance:
1. No appraisal. Borrowers are not required to have a home appraisal done to obtain this loan.
2. Little or no up-front costs. Those looking to avoid closing costs can opt for a slightly higher interest rate or APR.
3. Mortgage insurance premium (MIP) credit. Borrowers with an FHA loan that is less than three years old may qualify for a credit to offset the cost of the upfront MIP premium on their new refinance loan.
To find out if this loan would benefit you, contact a Cliffco Mortgage Banker representative today to go over your current interest rate and monthly payment.