What Is FHA Streamline Refinance?
Refinancing can be a very attractive option for homeowners looking to lower their interest rate and monthly mortgage payment while also tapping into some home equity to pay for renovations, upgrades, and other expenses. However, traditional refinances typically require a few stipulations, such as having a good deal of positive equity in the home. If you have an existing FHA loan but lack equity, then the FHA Streamline Refinance Program may be the refinance solution for you.
The Pros and Cons of FHA Streamline Refinance Requirements
The FHA Streamline Refinance Program offers homeowners a refinance option with more relaxed eligibility requirements. Because of your proven credit worthiness, the program can assist you whether or not you have positive home equity built up. However, there are pros and cons to consider with any refinance program, and the FHA Streamline Refinance is no different:
Pros of FHA Streamline Refinance
- Potential insurance refund. You may be able to get a partial refund of your previous upfront mortgage insurance premium; however, this can vary on a few factors.
- Appraisal may not be required. This can also vary, but because the FHA streamline program allows you to qualify regardless of equity, they will not likely require an appraisal.
- Reduced documentation. The program’s relaxed requirements may include less employment and income verification. The FHA will already be aware of your payment history, so additional or redundant paperwork will not be necessary.
Cons of FHA Streamline Refinance
- Mortgage insurance payments for the life of the loan. This is the only significant potential drawback of the FHA Streamline Refinance Program. Depending on when you obtained your original FHA loan, you can potentially be stuck paying mortgage insurance payments—albeit reduced and easier to make because of your lower interest rates—for the remainder of the life of your loan. Prior to June 3, 2013, the mortgage insurance portion of your FHA payment was removed once your loan balance reached 78% of the value of your home. Loans after that contained mortgage insurance that stayed with the loan until it was paid off. So if your original loan was obtained after June 3, 2013, nothing will have changed for you by doing an FHA Streamline Refinance now.
Is the FHA Streamline Refinance Right for You?
No matter your choice or what you’re eligible for, the professionals at Butler Mortgage can help match you with the right refinance to suit your specific needs. Our mortgage experts can help assess your current home loan situation and assist you in getting the most optimal refinance for your situation.
Consult With the Professionals at Butler Mortgage
For over 25 years, Butler Mortgage has worked with home buyers and homeowners looking to finance or refinance a Central Florida home. Let us help you find the right loan solution for you by calling 407-931-3800 or by filling out our free consultation form online.