6 Reasons Why People Will Refinance with FHA Loans

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If you have a mortgage insured by the Federal Housing Administration, one of the best opportunities to refinance in the next few years is with an FHA Streamline loan. This type of refinance offers many exciting benefits for homeowners that make it far easier for you to refinance into a lower rate. It is important to know that only FHA lien holders can refinance their present mortgage with an FHA-Streamline Refinance.

An FHA refinance can be done in 15 or 30 year terms, and can also have an adjustable or fixed rate. Here are the advantages of the FHA refinance that will cause many people to refinance in 2017 and beyond:

#1 You Don’t Need an Appraisal

If you have ever refinanced a home loan, you know that you always need to get a new appraisal with a conventional loan. When you do an FHA Streamline, you are saved the cost of getting another appraisal, which will cost you around $400. However, this has another big advantage: You do not have to worry if your home will appraise enough to do the refinance. If your home does not appraise for the amount that you want to borrow, most mortgage lenders will not allow the refinance.

Also, with FHA, you can still refinance even if you are underwater on your loan! FHA does this because the agency has guaranteed millions of FHA refinance loans, and the fewer that default, the better for its financial books.

#2 You Don’t Need to Verify Your Income or Employment

Many people who want to refinance into a lower rate could have had a problem with their income, such as a lost job. With a regular refinance, not having as much income can prevent you from doing the refinance at all. But with an FHA-home loan, you do not need to have your income or your employment verified again. This is a massive benefit that will certainly help many in trouble home owners in the next few years.

#3 Credit Score Checks Are Often Waived

FHA does not require your credit score to be checked to do a refinance. So, if you have had credit problems in recent times due to a job loss or another financial problem, you can still get your mortgage refinanced.

There are some FHA mortgage brokers that might have a certain credit score requirement; these lenders are allowed to set their own credit criteria. So, there is the chance that some lenders could check your score. If you have bad credit, you should look for another FHA lender to help you accomplish a refinance transaction.

#4 The Process Is Much Faster

With so much less paperwork required to do an FHA Streamline millions of homeowners can enjoy the benefits of a lower interest rate through a refinance in the next few years. Just by not having to do an appraisal, you could easily have three weeks taken off the time to get the loan done. So, if you have been delaying your refi because you thought it would take months, you are probably in for a big surprise with an FHA Streamline Refinance.

#5 Your Rates Are the Same As an FHA Mortgage

Even though you do not have your credit score checked or your employment and income verified, you can still get the same rate as on a regular FHA mortgage. Many conventional refinance loans have higher rates, but an FHA refi allows you to get a very low rate that can save you big each month. Learn how to qualify for a FHA loan.

See the Current FHA Rates

#6 You Don’t Have to Pay a Prepayment Penalty

If you want to pay off your loan early, you can always do it with an FHA Streamline Loan.

FHA Streamline Qualifications

The FHA streamline program is a great deal, but you do need to meet some requirements:

  • The home must be your main place of residence
  • You may not have had a late payment in the last year
  • You have to be current on your current mortgage
  • If you have an adjustable rate, you must be out of the introductory period to refinance
  • There must be a net tangible benefit to refi; this means you must be able to reduce your total monthly payment, including the mortgage principle and interest, taxes and insurance by at least 5%.
  • Closing costs have to be paid at closing, or paid with a slightly higher interest rate
FHA refinance loan

Enjoy the Streamline insured by the FHA

The Reality

One of the very best programs that the US government offers is an FHA mortgage, as well as the FHA Streamline Loan Program. If you are having any problem paying your FHA mortgage, being able to easily refinance your loan without much paperwork is a huge advantage that can be a total lifesaver.

As we mentioned above though, you need to be sure that your loan payment has not been late for at least 12 months. An FHA Streamline Refinance is not a way to save yourself from foreclosure if you are behind on payments. This program is simply for those who want to refinance into a lower FHA loan rate without most of the typical paperwork hassles that you usually have.

If you have an FHA loan that could be refinanced into a lower rate, based upon current interest rates, you would be strongly advised to look into the FHA Streamline Refinance Program.