Let’s face it. Refinancing is a pain. Everybody knows this. It’s a huge process with a bunch of paperwork and more qualifying than any homeowner really wants to deal with, but deal with it they do because refinancing can be a great way to save money. So we refinance, and refinance, and refinance, always in the hopes that we’ll end up paying less for our home than we would have. As a homeowner, did you know that there may be a way for you to refinance without all of this hassle? Some people call this the no credit qualifying loan, but in reality it’s the FHA streamline loan and it is a great way to get an FHA house refinance without the headache that comes with the typical refi process.
What is the Streamline Refinance?
The streamline refinance is a federally insured loan that was specifically designed for homeowners who already have loans through federal lenders – if your home mortgage was acquired through a conventional lender, you will not be able to qualify for the streamline.
In a nutshell, the streamline is a way for homeowner’s to refinance their home without all of the mess that comes with a traditional refinance. The process for existing FHA homeowners has been made much simpler than it was in the past largely because the government and lenders want homeowners to refinance – most of the time the refinance benefits the homeowner, and it benefits the real estate market as well. It becomes a win-win situation.
Qualifying for the No Credit FHA House Refinance
As mentioned previously, the first prerequisite for qualification is to have a federally insured loan in place. This home mortgage must also be in good standing with the lender, which means that you have to be up to date on your payments and you need to have a clean 12-month payment history, with all payments being made on time, in full.
Another requirement is that you have to have owned the home for at least six months. If you want an FHA house refinance after two months of ownership, it will not happen with the streamline. Wait a few months and try again. When you do refinance, make sure you target the lenders who are already federally approved. You cannot get a streamline refi through a lender that is not federally approved. However, if you don’t want the streamline and you’d rather switch to a conventional lender, you may be able to do so but it will require the full process.
One neat little detail about the streamline is that it doesn’t require a home appraisal. This is rare for the world of refinance because most of them do. This particular FHA house refinance can use the old appraisal. However, you won’t be able to refinance for more than the original loan. It has to be the same amount or less if you intend to skip the appraisal.
It’s important to note that the streamline was created as a way to make the loan easier to manage for a homeowner. Because of this it is a requirement that the streamlined loan have monthly payments that are lower than those on the original loan. Also, you can’t cash out your equity. That being said, though the monthly payments have to be lower, the closing costs aren’t going to be waived. You will still have to pay the closing fees for the new loan, which will be in the thousands. This will need to be paid either up front or rolled into the loan. Depending on the lender, you may be able to pay a higher interest rate and forego closing costs. There are a few different ways to work out the closing payment but you’ll need to discuss these with your lender to determine what options are available to you through the lender you’ve chosen.
While there are risk involved with every big financial move, a refinance is beneficial when it comes to reducing interest rates and monthly payments. Just make sure you calculate your bottom line before you sign off on any loan. You want to make sure the move you make now is going to save you money in the long run, not keep you in debt longer. A good loan officer will be able to help you determine whether or not the refinance is going to be a smart financial move. It’s a good idea to get a trusted expert on your side before you jump into the refinance world.
FHA house refinance with a streamline is worth looking into.