FHA streamline refinance may not be right for you. However, if rates have dropped significantly or you are able to afford a fixed rate loan and do not want an ARM, it might make sense.
You can save money on interest if you actually plan to stay in your home for the long-term.
Ask yourself these questions before you jump onboard.
- Are I able to save enough money to justify refinancing?
- What would make me feel more comfortable with an ARM or a fixed-rate loan?
Why Does an FHA Streamline Loan Make Sense?
Refinance is sometimes not a good idea, as we mentioned.
First, ensure you have the funds to pay for closing costs. You cannot include your closing costs in the loan, unlike most other loan programs.
You should have enough money to pay the closing costs and the FHA upfront mortgage insurance fee of 1.75%. Some of the insurance you have already paid may be eligible for credit.
Next, make sure that the interest rates have not changed enough to refinance. It doesn’t necessarily make sense to refinance if you have a lower interest rate. Take a look at the bigger picture. Is the monthly payment lower? Are the over-loan costs lower? To decide, look at the total loan cost for the entire term.
The FHA Streamline Refinance: What are the Pros and Con?
Pros:
- It is easy to get and use
- An FHA MIP refund may be available.
- No appraisal necessary
- There is no need to do a credit check or verify income.
- This is a simple way to reduce your monthly payment or modify the term of your loan.
Cons:
- You are responsible for closing costs upfront
- The upfront MIP will be repaid.
- Your loan term will be renewed.
FAQ – FHA Streamline Refinance
Are closing costs for the FHA streamline refinance required?
Yes. You need to pay all closing costs upfront for the FHA streamline refinance. While some lenders might offer no-closing costs loans, the interest rate may be higher. Refinancing may not offer the same tangible benefits.
Do You Need an Appraisal for FHA streamline Refinance?
The FHA does not require an FHA appraisal. You don’t need to make any repairs in order to satisfy the FHA minimum property requirements.
Does the FHA streamline refinance require a minimum credit score?
Beverly Hills Mortgage Brokers are not required to obtain credit in order to refinance FHA streamline loans. To qualify, your lender will usually need between 580 and 640 credit.
Final Thoughts
You may be able to get lower rates if you have an FHA loan. There are many Beverly Hills mortgage brokers to choose from. It doesn’t mean you have to use them all.
Compare your options and compare the closing costs, rate, and loan term. You must show that you are able to repay your mortgage on time and have a good credit history. If you are looking for the best loan, it can help you save money.