The Simplest FHA Refinance a Mortgage Program

The Federal Housing Administration has one goal, and that is to open up the opportunity for home ownership to any person who is willing to be responsible for a mortgage. Because of this, many people have now become home owners using the programs available through the federal government. Of course, once you become a homeowner that doesn’t mean that you’re simply going to stay with the loan you were given. Many homeowners find after a few years that they want to refinance. For federally approved homeowners, there is an FHA refinance a mortgage program that is easy to take advantage of and will offer the financial benefits of most refinances on the market today. The program is known as the streamline refinance.

The Ins and Outs of the Streamline Refinance

FHA RefinanceRefinancing is a process. It can take months and it can be complicated. It also requires plenty of paperwork, appraisals, qualifying, finding a lender, and on and on. Knowing the process can put some people off, the Federal Housing Administration created the streamline hoping to make it a bit easier. With this particular refinance you don’t have to get an appraisal on the home and there isn’t as much paperwork involved so the process becomes easier. The qualifications are a lot less forgiving than other refinances as well, which is great for homeowners who really just want to reduce the interest and/or mortgage payment.

Qualifying for a typical refinance requires income verification, debt-to-income ratios, credit scores and reports, asset information, and a good financial history. Getting all of this information together can be a hassle, and for many homeowners proving that they qualify in all of these areas can be difficult, especially in light of the recent economic downturn. The government waived many of these qualifications for the streamline. So it’s not uncommon for a homeowner to get approval for a streamline even if they owe more on the home than it is worth or they are in a job that isn’t paying as much as they need. Same thing applies for the credit score. You may have gotten the loan with a score of 680, but had it drop to 600 and still be able to refinance with the FHA refinance a mortgage program. It’s forgiving because when homeowners refinance and lower their mortgage payment, the home often avoids going into foreclosure.

The Streamline FHA Refinance a Mortgage Catch

The streamline is a great FHA refinance a mortgage option, but it does have its downfalls. First, you can’t refinance and expect to cash out the equity. The goal of this particular refinance isn’t to give you access to your equity, rather it is to reduce the mortgage and interest payment, making them easier to meet every month. If you’re looking to increase your mortgage amount, you’ll need to find another option.

In addition to this, while it isn’t required that your income and credit score be verified, you do have to prove that you are able to handle the needs of the mortgage. So your financial history does have to look fairly decent. Basically, you can’t have a mortgage that is in default, and you need to have a history of making payments in full and on time. This is the most important requirement. If you haven’t been getting these payments in, you lose your chance of qualifying for the streamline.

In addition to this, the end goal of the streamline has to be to reduce your mortgage payment and/or your interest rate. In some cases, switching the loan type to a fixed mortgage can be considered a good end goal as well. Basically, if you’re going to refinance with this particular option, you need to show the lender that you can handle the requirements of the refinance and that the benefit will be worth it to you and them.

The streamline option isn’t available for every homeowner. It is only an option for those who already have existing FHA mortgages. However, if you do qualify for the program, you should find it fairly easy to get through the process and get the refinance approved. It may take some time, but it won’t be as big of a hassle as a traditional refinance, and the financial benefits are typically worth it. As with any financial decision, work closely with your lender and loan officer to make sure the benefits of the refinance outweigh the costs, and that the refinance itself pays off in the end.