With interest rates at their lowest in years, this is a great time to consider refinancing your current Federal Housing Administration (FHA) mortgage. The FHA will give you a painless, effortless refinancing program that has no requirement for income or asset verification. You might not even need a property appraisal if you have enough equity paid into your property.
Special Program Guidelines
The best part of this program is the generous allowance for the loan-to-value ratio between your mortgage and your home. This is a conversation that you should have with the loan officer handling the Streamline Refinancing at FHA. An explanation of the loan-to-value ratio is very important to any borrower.
Some important considerations to understand include:
- The home you are refinancing must be your primary residence
- If you have more than two late payments, there will be a problem using this program
- You cannot have an FHA Streamline Refinance within the previous six months
- A credit score above 620 is beneficial
Benefits of Appraisal vs Non-Appraisal
Rolling the cost of closing into the loan amount means that you will need an appraisal of your property, especially if the FHA Streamline Refinance is more than 1.5% above your current mortgage amount. The appraisal scheduling will slow the closing time line just a bit. However, the alternative will mean that you pay closing costs out of pocket.
A benefit of an FHA Streamline Refinance is that you can skip the appraisal process completely. If you choose this route, plan on paying your closing costs from your own pocket. This can be a burden unless you talk to your lender about covering these costs in exchange for a slightly higher mortgage rate, which might defeat the purpose of refinancing.
The prudent path to a good outcome is the “quote quest” where you consider more than one lender for your FHA Streamline Refinancing. You should contact at least three different lenders for their interest rates, loan terms and availability of this very special FHA streamline financing. Be certain to include your current mortgage lender in your quote quest.
Since it has been approximately 50 years since interest rates were at the current levels, this is a great time to consider the opportunity to snag an FHA Streamline Refinance. If a 30-year mortgage is your current reality, this is a great time to consider a 15-year loan. Many owners have mortgage loans of 4% or more and there are good reasons to refinance those mortgages. The time is right, the date is now.