If you currently have a FHA loan and want to refinance, the FHA streamline refinance program may be just the thing you have been looking for. This is especially true if you have been afraid to try to refinance since you know that your property value has gone down. Not everyone knows about this loan program, but the Federal Housing Administration, which is also known as FHA, has allowed homeowners with a FHA loan to refinance using this special program since the early eighties.
How Do I Qualify for a FHA Streamline Refinance?
To qualify for this loan program is that you must already have a 30 year FHA loan on your home. If you do not, you cannot take advantage of this great program. If you already have a FHA mortgage and you are only looking for a lower monthly payment then you will most likely qualify for a streamline refinance.
If you only want to lower your monthly payment, then your credit, assets, and income are not considered. You will not have to get an appraisal on your home either. This is significant in today’s real estate market (2008) with property values going to down in many parts of the country.
The one catch to this loan program is that you will have to restart your escrow account with the new loan. This means that when you go to settlement for your new mortgage you will have to bring enough money to set up your new escrow account. However, in most cases, you will receive a escrow refund check from the mortgage that you are paying off. If this is the case it is possible that you will not have to pay much if anything when all is said and done.
If your mortgage balance is going to increase with the new refinance, FHA will look at your twelve month mortgage payment history on your current mortgage. If you have been late more than one time in the past 12 months you will have a difficult time getting a new mortgage with the streamline process. Insider Tip - make sure you keep your payments on your FHA mortgage paid as agreed for a period of 12 months in a row if you plan on using this program to refinance in the future.
You will not be able to use this loan program is you are looking to get cash out of your property.
In conclusion, the FHA Streamline Refinance program is a great way to refinance if you already have a FHA mortgage. To qualify, you will need to have perfect mortgage history and have your mortgage payment go down. If you have had some problems with your mortgage history or your payment will actually go up, you may want to check with a FHA lender to see if you qualify for a FHA Secure mortgage program.
Debt Free Dave has been in the mortgage and consumer finance business for over 10 years. He has a Finance and Real Estate degree from the University of Arizona.
This Article is designed to be of general interest and should not be considered legal advice. The specific information discussed may not apply to you. Before acting on any matter contained herein, you should consult with your personal legal adviser.
