The FHA Streamline Refinance Mortgage: No FHA-Required Credit score Examine
FHA refinance loan options look more attractive to some borrowers as FHA loan rates are still well below the three percent line at press time after some ups and downs in 2021. But the range of options confuses some.
What Do You Need To Know About The Streamline FHA Refinance Option Compared To FHA Cash-out Refinance Or FHA 203 (k) Rehabilitation Loan Refinance?
Tweak the FHA Loan Facts You Should Know
First-time applicants may be surprised to learn that there is no FHA required assessment. Your lender may ask for one, but if they choose to process your FHA refinance without one, you will be spared the evaluation fee.
Most FHA loans require a credit check and have a number of qualifying minimums. What about FHA Streamline?
FHA Streamline Loans allow your lender to process your application without re-credit check if your lender agrees. That means the credit scores that qualified you for your first mortgage can be used on the streamlined refi loan.
FHA optimizes refinancing requirements
The FHA refi loan is usually required to be of any benefit to the borrower; these loans can result in lower mortgage rates if the terms are right and the borrower is still eligible for these rates.
A lower mortgage payment may also be possible with a refi loan. These things – the lower interest rate, the lower payment – are known as tangible net benefit to the borrower and these benefits are the only reason the Streamline option exists.
And there is more – in addition to the amount of the new loan, you can also apply for additional funds for approved energy-saving modernizations of the house.
This is known as the energy efficient mortgage option. If your home needs upgrades to save money on utility bills, ask your lender how much you can add to the loan amount.
Remember, this option is not getting you money for any purpose – any additional funds will have to be used on specific projects that you and your lender will decide together.
Keep in mind that when applying for an FHA purchase loan refinance with a Streamline Refi, the FHA guidelines require that your lender qualify for the new loan if your add-ons (like the energy efficient mortgage) have the loan amount and the loan amount monthly payment increase by too much.
FHA Refi Loan Rules
You can apply for a fixed rate loan or a variable rate mortgage with the FHA Streamline program; Your current mortgage must be an FHA loan, there are closing costs, and your lender can allow you to fund certain expenses.
You need to find out what these are with your lender as the standards of that financial institution apply.
You can refinance with the same repayment term as you originally had or choose a shorter term. A shorter term loan may have a lower interest rate and that is worth considering for borrowers who can afford the new, shorter mortgage with no default or default.