FHA Streamline loans have faster application processes, and fewer requirements than conventional refinancing. If you have an existing FHA loan and are current on your mortgage payments, you can take advantage of this virtually no-hassle refinancing option, but there are dos and don’ts to consider.
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How to Prepare for FHA Streamline Loans
FHA Streamline loans have faster application processes, and fewer requirements than conventional refinancing. If you have an existing FHA loan and are current on your mortgage payments, you can take advantage of this virtually no-hassle refinancing option, but there are dos and don’ts to consider.When you apply you won’t be required to show your tax returns or other proof of actual income, and there’s no face-to-face meeting at the bank to attend. This leads some to believe it’s not necessary to do the same kind of homework or make the same careful calculations done to get into the original loan—but that’s a mistake. Take the time to get fully prepared for and FHA Streamline refinance loan.
One of the most important things to do? For those who don’t have fixed rate FHS insured mortgages, avoid waiting until the end of your FHA loan introductory rate. If you still have the introductory rate, start exploring your FHS Streamline options as soon as possible and apply the moment you are eligible to do so. You should examine your FHA Streamline options early and make sure you have the best terms and interest rates available to you.
For those who struggle to make their payments and are eager to get into an FHA Streamline refinancing loan to get some financial breathing room, don’t let your payments lapse on the current FHA insured home loan. Otherwise, you won’t qualify for an FHA Streamline loan application.
Decide in advance about how you’ll pay the closing costs on an FHA Streamline loan. If you want to pay them up front, start setting aside money as soon as you know you want to refinance. It’s also very important to decide what kind of FHA Streamline loan you want. Do you want a loan where the closing costs are built into the amount you borrow? Do you need an FHA Streamline loan where the lender charges a higher interest rate to cover the closing costs?
Don’t automatically take the “no appraisal” version of an FHA Streamline loan. While it’s true that FHA Streamline loans let you refinance without a new appraisal, this may not be right for you, especially if you don’t want to pay those closing costs up front. For this purpose you need a “with appraisal” FHA Streamline loan. “No appraisal” loans only let you borrow up to the original loan amount, no more.
Do the math with your lender to determine how much money you will save on your FHA Streamline loan. It’s a bad idea to assume your lower monthly payments equal more money saved on the loan. How much do you pay over the entire course of the loan? You should know both how much per month you will save and how much you will pay over the lifetime of the entire loan. Be sure to ask your lender about the terms that might not be clear or anything you don’t understand about how the FHA Streamline refinancing program works. Do you know how subordinate liens are affected by the refinancing program? How does mortgage insurance affect the final amount of your loan? Have you read the fine print on the FHA Streamline loan paperwork? Always get answers to your questions before agreeing to any new loan product.
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