FHA Streamline Refinance
A refinance that will take you where you need to go in the fast lane.
Streamline..doesn’t that just sound like one of those futuristic cars like the BMW i3 shown in the recent Super Bowl commercials? Maybe if there’s another Fast and Furious franchise, the word “streamline” would be included in the title. Speaking of Super Bowl..sorry, Seattle (you should’ve beasted it instead of doing a haymaker). If you want to refinance without all of the waiting. Let’s get straight to the point, and go for the gusto on this one. Here are some tips to help you out.
What is FHA Streamline Refinance?
FHA Streamline Refinance is a federal government based type of program that allows homeowners to refinance their home even if the loan is double the value of the home. It’s called a streamline; homeowners can either bypass the process of underwriting and obtaining the right documents. Making this process pass through much quicker.
Eligibility for FHA Streamline Refinance
First of all, you can start things off with a spotless 3-month record of mortgage payments. The least risk involved with your request for refinancing, the better chance you’ll have of a lender accepting the application. Make sure you have not refinanced prior to 6 months before your initial request. The key to this refinance is lowering rates. Unlike a cash out, you cannot get cash from the equity. While this may seem like a Debbie downer – there are some other benefits of choosing a streamline.
What are Some Benefits of FHA Streamline Refinance?
For a lot of homeowners, it’s a bit hard to refinance within a short amount of time. Lenders want to ensure that you have a proper income report, W-2s, and good credit. A lot of lenders don’t worry about all of that information to a degree. Why? The main key is lower mortgage rates. By allowing a borrower to receive lower rates, there’s more chance of on-time payments and building stability in the home. A default is the worst case scenario which means a lender could up creek without a boat, paddle, and life jacket. If a borrower is smart, they will take a higher rate once their income situation is better to help decrease the life of their mortgage payments. Additionally, you won’t have to worry about closing costs added when you refinance. Otherwise, you would pay out of pocket fees such as escrow, origination, and title documents. Just imagine if you lived in an area prone to bad thunderstorms or hurricanes. You would have to pay for flood insurance. Despite all of the benefits, there are a bit of cons that come with the territory.
Cons of FHA Streamline Refinance
Some homeowners dislike the limitations of personal use from streamlining their mortgage. Due to low risk brought on the lender, it’s easier for them to streamline refinance. However, homeowners will not be able to enjoy these factors. Equity cannot be cashed out so this severely limits what a homeowner can do with their home or other expenses. Some homeowners consider going through a cash out refinance because they can finance their dream vacation, pay for expenses (car and school bills), invest in their primary home, or purchasing a second investment. However, that takes time, responsibility, and additional fees. Not to mention, the lender will be on your butt like a bee to nectar to make sure you can handle the fees (amongst other responsibilities).
Make sure you speak with a reputable lender to help you decide on the best course of action. All in all, if you just want to save some money and lower your rates on a monthly basis, this could be the plan for you.