If you have purchased your current residence via an FHA loan and have thought about refinancing to a lower rate to free up money for other purposes, FHA Streamline Loan Refinancing could be just the thing you need.
Streamline loan refinancing through the FHA has several features that make it attractive to homeowners. These include:
- Appraisal waiver, allowing you to use the original purchase price of your home, regardless of its value today
- No income or credit score verification
- No employment verification
The appraisal waiver is a particularly popular feature as it allows unlimited loan-to-value (LTV), an important feature for homeowners whose houses lost value during the economic downtown. When applying for a Streamline Loan Refinance, homeowners can be jobless or have fair to poor credit and still receive approval, factors that prevent refinancing under other programs. If homeowners want to roll their closing costs into the loan, however, they must obtain an appraisal, otherwise, those fees must be paid out of pocket.
The only homeowners who are eligible for the Streamline loan are those who currently have FHA mortgages. Homeowners who want to refinance to an FHA mortgage from another type of loan must go through the normal FHA refinance process.
To obtain an FHA Streamline Loan Refinance, other factors are required. You must not have more than two, 30-day late payments on your mortgage in the last 12 months and payment history must be perfect for the last three months. You must not have completed an FHA Streamline Refinance in the last six months. Finally, the refinance must show a net tangible benefit, meaning the new loan must reduce the total monthly mortgage payment by 5% or more. Refinancing to free money to pay bills is not acceptable.
For more information on how we can help you obtain an FHA streamline, contact us or come visit us at Pacific Mortgage Group.