If you currently have a loan with a federally insured lender and you want to refinance, you’d be wise to look at the streamline option and see if it will fit your needs. This refinance is a loan specifically for homeowners that already have FHA-insured loans, and acquiring it is a much simpler process than traditional refinances. FHA refinance companies offer this type of loan to homeowners because it is a loan that benefits both parties.
Requirements and Guidelines for a Streamline
The greatest benefit of the streamline refinance is that it isn’t a hassle to acquire. The second benefit is lowering your interest rate or monthly payment. With a standard refinance you have to submit quite a bit of paperwork, including work history, job history, credit history, and your assets and debts. You also have to get an appraisal done on the home. Then, once everything has been submitted, you play the waiting game while all of your information is going through the underwriting process. It is definitely a process for a traditional refinance, and it can take some time before it is completed. This isn’t the case with the streamline.
The streamline refinance uses most of the information that was previously submitted to the lender to get the loan approved in the first place. You will have requirements that have to be met and you’ll need to provide some documentation, but a large portion of what would normally be required isn’t necessary in order to be approved. The biggest obstacle you will face with the streamline is your payment history. The guidelines state that you must be current on all of your payments with your existing loan, and these payments should have been made on time. It’s also required that you live in the property for at least six months.
There are a few limitations with the streamline. First, you don’t have to get an appraisal, but that means that you won’t be able to increase your loan limit in any way. Without an appraisal, you’ll simply be refinancing to adjust the terms of the mortgage and nothing else. If you get an appraisal done you may be able to increase the mortgage amount, but you’ll need to discuss that with your lender. You are also required to pay the fees and closing costs that come with any refinance. This can be done up front or, if your lender approves, you may be able to tack them onto the loan; this will require an appraisal because the loan limit will increase.
Streamline Refinance Companies Value their Customers
The streamline refinance can only be acquired through an FHA refinance company. It is a government program and has to be secured through a government lender. FHA refinance companies are happy to give this option to homeowners because, as mentioned above, both parties benefit. You benefit because you get to adjust the terms of your loan, often saving you money, without going through the hassle of the refinancing process.
Most of the time the customers that use the streamline aren’t in bad shape financially – they’ve proven that by showing that their payments have been made on time. So they get customers who are financially stable and can be trusted to handle the demands of the loan. Of course, they can give out more loans which means an increase in revenue.
While it’s true that the streamline option is only available for homeowners with existing FHA loans, above and beyond that there are very few limitations for homeowners. The streamline refinance was designed to be easy, secure, and affordable. They’ve succeeded in their goal; the streamline has proven to be exactly what it was intended to be. As an FHA homeowner, it would be very wise to take advantage of this program.