Refinance interest rates have been very low for the past couple of years, a result of the economic downturn that occurred a little over five years ago. Because of these lower rates, many people are looking to refinance their existing mortgages; they want to get lower rates to save money over the life of the mortgage. There are a few different ways to take advantage of FHA refinance interest rates, but for homeowners with existing FHA mortgages, the streamline refinance is the easiest and quite often the best option.
Appraisals and Credit Scores Not a Problem
The streamline refinance is a very unique loan in that the requirements for approval are much less demanding than those for other loans. The idea behind the streamline was a loan that could be easily secured with very little work from the homeowner. With that in mind the FHA decided that a loan that didn’t require an appraisal and that didn’t require mounds of paperwork would be easier to handle.
With the streamline you are able qualify for the loan using the information you submitted to the lending company with the original loan. You don’t have to resubmit your paperwork, your credit report, or have an appraiser look at your house. You don’t have to provide your income statements or proof that you are employed. In reality, you could be in mountains of debt and out of work and still get approval for the streamline, which would then give you lower FHA refinance interest rates.
If you want to qualify for the streamline you have to prove a couple of things. First, you have to show that your mortgage payments have been made in full and on time for at least the last three months. You have to show that the refinance is going to lower your monthly interest and mortgage payments, or benefit you some way financially. You also can’t apply for the refinance if you’ve already refinanced within the last 210 days. And, of course, your current loan has to be FHA insured. A couple of little clauses with the streamline state that you cannot cash out any money with this refinance, and your loan amount can’t increase in any way. This means that the fees that come with the refinance will have to be taken care of through means that don’t involve increasing the mortgage amount.
FHA Refinance Interest Rates Work With the Streamline
Aside from the simply qualifications, the streamline operates much like any other loan. Homeowners are still required to pay closing costs, lender fees, upfront mortgage insurance and mortgage insurance premiums. The beauty of the streamline, however, is that it makes it easy to get FHA interest rates because you don’t have to jump through hoops to qualify. This is especially important if you are a homeowner who is upside down on the mortgage or you’ve just lost your job and you’re experienced a financial setback. The streamline refinance enables you to refinance your home so you can take advantage of lower interest rates, which will in turn lower your monthly payment. When you’re struggling financially, a payment that drops by a couple hundred dollars can have a huge impact. In fact, it can be the factor that determines whether or not you default on the loan.
It’s worth noting that the streamline refinance is not a free refinance. As mentioned above you will have to pay the closing costs and fees, as you would with any refinance. So you will need to figure out where that money is coming from before you can complete the loan. Some people have this in savings, some have it gifted or borrowed from a friend or family member, and some of them get a zero-cost refinance, which is a refinance where the loan officer works out a credit for the required payment. The zero-cost streamline refinance is often the best option for homeowners. Regardless, before you try to secure lower FHA refinance interest rates, make sure you have a plan of action for the source of the money so you’re not stymied in your efforts to get the refinance.
All refinances carry a certain amount of risk, just like any financial investment, so make sure you weigh the pros and cons before you complete the refinance. If you find that the refinance will save you money in the long run, or make your finances easier to bear in the short run, it may just be worth it to you. If so, your loan officer will be your best resource for working out all of the details for the refinance so you can get the rate you need.