Understanding the FHA Streamline Refinance Process

An FHA streamline refinance loan is a unique lending instrument that is designed to make things easier on you. The streamline loan process is designed to be faster and simpler than any other refinance loan out there. Therefore, they are an extremely attractive loan. If you are considering getting an FHA streamline refinance loan, here are a few things that you need to consider. 

Basics

The FHA streamline loan process has a few things that are universal. The only way that you can get an FHA streamline refinance loan is if you are already in an FHA mortgage. If you are with a traditional mortgage, an FHA streamline is not an option for you. In addition to that, you can only do a streamline mortgage if your objective is to lower your monthly payment. Once you pay on your mortgage for a while, you will develop some equity in your house. Many people will refinance their existing mortgage to try and get cash out. With an FHA streamline, you can not get any cash out. You are only doing it to lower your monthly payment and nothing else. 

Low Documentation

One way that the streamline refinance process is designed to be easier is the low documentation that comes along with it. You will have fewer documents that you have to worry about filling out compared to a traditional loan. When you have fewer documents, the whole process is faster. You can get in and out relatively quickly. 

Easy Approval

When you apply for an FHA streamline, the approval rate is very high. With these types of loans, they do not verify your income or pull your credit score. The main thing that they look at is your payment history with your existing FHA loan. When they originally set up your FHA loan, they looked at everything important then. They verified your income and checked to see if your credit was good enough to be approved. As long as you have stayed current with your existing loan, they do not feel that it is necessary to check everything out again. They know that you are still getting enough income to pay your bills. They also feel comfortable with your credit score as it is. This lack of verification leads to a much quicker and easier approval process for you. 

Closing Costs

With an FHA streamline, there will be some closing costs involved. This is one of the downsides to the process, but it is the same as any other type of refinance. You have to give the lender some sort of incentive to do the loan. Otherwise, they would not be gaining anything in the process. With an FHA loan, there are caps on what they can charge you for closing costs. Therefore, there is some sort of regulation associated with it. With this protection, you will usually get a pretty competitive rate on the closing costs associated with the loan. 

 

 

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