Looking to refinance your existing FHA mortgage? The FHA Streamline refinance is the fastest, simplest way for FHA-insured homeowners to refinance their mortgages into today’s low mortgage rates.
While it might sound too good to be true, the FHA Streamline is a very simple refinance loan program backed by the Federal Housing Administration. It can offer a simplified, low-doc application process and below-market rates. The kicker is the program is only available to homeowners who already have an FHA loan.
There are two types of FHA streamline refinances: credit qualifying and non-credit qualifying.
A credit qualifying streamline refinance requires your lender to perform a credit check, calculate your debt-to-income (DTI) ratio and assess your ability to continue paying your mortgage. (Note that borrowers do not need to use the same lender that approved the original FHA loan).
These requirements don’t apply to non-credit qualifying FHA streamline refinances, so who would opt for the more labor-intensive option?
Specific circumstances, like needing to remove a borrower from the mortgage, require a credit qualifying streamline FHA refinance. There’s a plus, though: The added documentation required with a credit-qualifying streamline refinance could result in a lower interest rate than you would get with the non-credit qualifying version.
For the most part, the FHA Streamline works like any other refinance program. It’s available as a fixed-rate mortgage and there is no prepayment penalty to worry about.
Another big plus is that rates for the FHA Streamline Refinance are the same as mortgage rates for a homebuyer’s FHA loan. There’s no penalty for being underwater, or for having very little equity in the home.
Benefits of an FHA Streamline program include:
- Low refinance rates — FHA loan rates currently average 2.59% which is incredibly low compared to most of the mortgage industry
- Lower Mortgage Insurance Premium rates — If an FHA loan was secured between 2010 and 2015, the annual insurance premium may qualify to be lowered using FHA streamline refinancing
- Mortgage Insurance Premium refund — Homeowners who use the FHA Streamline Refinance may be refunded up to 68% of their prepaid mortgage insurance, in the form of a MIP discount on the new loan
- No Appraisal — Skip this step altogether
- No Verification of Job or Income — FHA Streamline refinancing is an option even without a job or with a recent pay cut
If you are looking to refinance your current FHA loan and want to know how to get started, please feel free to reach out to Bluefire Mortgage at (760) 930-0569 to discuss your financial options.