If you currently have an FHA loan and want to lower your interest rate or shorten your loan term, an FHA Streamline Refinance could be the perfect option for you. It’s a streamlined process designed to make refinancing quick and straightforward, saving you time and money. At Edge Mortgage Inc., we’re here to help you understand everything you need to know about this program and whether it’s the right fit for your needs.
START YOUR REFINANCE NOW!
What is an FHA Streamline Refinance?
An FHA Streamline Refinance is a loan program designed for current FHA loan holders looking to reduce their interest rate or adjust the term of their loan. The best part? It’s called “streamline” for a reason. This type of refinance typically requires less paperwork and fewer steps than a traditional refinance. It’s perfect for those who want to lower their payments without needing cash back on their primary residence.
Difference Between Traditional Refinance and FHA Streamline Refinance
You might be wondering how an FHA Streamline Refinance differs from a traditional refinance. Let’s break it down:
- Documentation: A traditional refinance usually requires a full set of paperwork, including proof of income, credit checks, and an appraisal of your home. With an FHA Streamline Refinance, most of these steps are skipped. There’s no income verification or home appraisal needed, which simplifies the process significantly.
- Qualification Requirements: Traditional refinances have stricter qualifications and often require a higher credit score and debt-to-income ratio. FHA Streamline Refinance, however, is generally more lenient and only requires a 12-month mortgage credit check.
- Speed: Due to the reduced paperwork and requirements, FHA Streamline Refinances are typically much faster than traditional refinances. If you’re looking for a quick solution, this may be the way to go!
How Do You Qualify for an FHA Streamline Refinance?
Qualifying for an FHA Streamline Refinance is relatively simple compared to other refinance options. Here’s what you need:
- Payment History: You must have made at least six on-time payments on your current FHA loan. This shows that you’ve been consistent with your payments and are in good standing.
- Waiting Period: The new loan cannot close until 210 days after the original note date of your current loan. This is a standard rule to ensure some stability in your payment history.
- No Appraisal or Income Verification: One of the major perks of an FHA Streamline Refinance is that it typically does not require an appraisal or income verification. This can save you both time and money. However, a 12-month mortgage credit check will still be required.
These factors make the FHA Streamline Refinance a quick and efficient option. Especially if you’ve maintained good payment habits and meet the basic qualifications.
Costs Associated with an FHA Streamline Refinance
While an FHA Streamline Refinance is designed to be simple and cost-effective, there are still some costs involved. Here’s what to expect:
- FHA Mortgage Insurance Premium (MIP): Like your original FHA loan, an FHA Streamline Refinance includes both upfront and annual MIP fees. If you are not exempt from this, the fee is only 0.5% of the base loan amount. Which is relatively low compared to other options.
- Closing Costs: Although lower than with a traditional refinance, you’ll still have some closing costs. Including title fees, underwriting fees (which are often reduced for this type of loan), and the cost of setting up a new escrow account. The good news is that most of these fees can be rolled into your loan amount. Making it easier on your wallet.
- Refunds and Payment Timing: If you plan it right, you could potentially skip up to two mortgage payments with an FHA Streamline Refinance. Plus, any overages from payments, interest, and your escrow account will be refunded within 30 days of closing, so you won’t miss out on any funds.
What’s the Catch?
The FHA Streamline Refinance is a great option. But it does come with one specific requirement: you must break even within 36 months of closing. This means that the savings you get from lowering your interest rate must cover the costs associated with the refinance within three years.
How is This Calculated?
To determine if you’ll break even, the VA takes the allowable fees, expenses, and closing costs (minus any lender credits) and divides that total by the reduction in your monthly principal and interest payments. Here’s an example:
- If the fees amount to $6,000 and your new loan saves you $200 per month, it would take 30 months to recoup the costs, which meets the requirement.
- However, if the fees are $6,000 and your savings are only $150 per month, it would take 40 months to break even, and you wouldn’t qualify under the FHA Streamline Refinance terms.
This rule ensures that the refinance truly benefits you and doesn’t just add extra costs without enough savings.
Is an FHA Streamline Refinance Right for You?
If you’re looking to lower your interest rate and monthly payments or shorten the term of your FHA loan, an FHA Streamline Refinance could be a great fit. It’s fast, requires less documentation, and doesn’t need an appraisal. This makes it a quick and straightforward way to reduce your mortgage payments. At Edge Mortgage Inc., we specialize in helping our clients determine if an FHA Streamline Refinance is right for them. We are with our clients through each step of the process.
Edge Mortgage Inc. is your Trusted FHA Streamline Refinance Mortgage Broker
Knowing what an FHA Streamline Refinance is and understanding the benefits can help you decide if it’s the right move for your financial situation. If you meet the basic qualifications and want a quick, no-hassle way to lower your mortgage rate, this refinance option may be exactly what you need.
Ready to learn more about an FHA Streamline Refinance or see if you qualify? Contact Edge Mortgage Inc. today, and let’s get started on making your mortgage work better for you. We’re here for you every step of the way to find the best option for your home and financial future.
We have many 5-star reviews from our satisfied clients
“Keri did an amazing job helping us with our purchase. Not only was she very knowledgeable, she also kept an eye on the market to lock us in on the best deal. As we came closer to deadlines, she would do triple checks to see if anything has changed. We are definitely going to be using Edge when we make another purchase! Update: We went to Keri for our Refi! She was able to get us a great deal and saved us hundreds on our monthly payments.” -Sophia
“Working with Keri and Cheryl to obtain a new mortgage was wonderful! Great communication, thorough explanations, and a willingness to do whatever it took to make the process seamless was our experience from start to finish. I would absolutely use Edge Mortgage again and highly recommend them without hesitation.” -Michael
START YOUR REFINANCE NOW!
Edge Mortgage Inc. is located in Johnstown, Colorado, and serves Ohio, Colorado, Wyoming, and Nebraska. We offer honest answers and a stress-free process. We have no hidden or extra fees, keeping more money in your pocket. We are your trusted mortgage broker, and we are ready to serve you. Call us today at 970-744-0000.
You may also be interested in reading: Veteran Home Owners: What is a VA IRRRL and How Can it Benefit You?
