FHA refinancing is a solution to all the complex steps involved in refinancing an FHA loan, which enables you to get a new loan, at astonishing FHA loan rates. Refinancing an FHA loan in a conventional way can be quite a daunting task wherein your application has to pass through a sea of endless paperwork before getting anywhere close to being approved. In addition, not to miss debt to income ratio check, credit checks and employment verification that will be eating up a lot of your time.
FHA streamline refinance is a specialized refinance transaction, which enables the FHA insured mortgage borrowers to bypass all the complex steps in refinancing an FHA loan, making it much quicker and simpler than conventional FHA home loans.
Advantages of FHA streamline Refinance
There are any advantages of an FHA streamline refinancing
Some of the important advantages are as under:
- 1. No Verification
The major advantage of FHA streamlined refinancing is that it doesn't require the time-consuming income, credit score or even employment verification, which means more convenient and faster process.
- 2. No Appraisal
One distinguishing feature of FHA streamline refinancing is that it doesn't require the property's appraisal. It greatly depends on the original price of the property, which is a boon for those underwater homeowners whose loans are much more than their property's worth.
Thus, streamlined FHA refinancing can help you in refinancing an FHA loan, without going through the phases of verification and appraisal.
Requirements for Streamline FHA Refinancing
In order to apply for streamline refinancing of FHA loan, there are certain requirements, which are mentioned below.
- FHA insured loans- Only borrowers who have FHA insured loans are eligible for streamlining FHA refinancing.
- Payment History- To minimize the risks, FHA has decided that the borrower should have a spotless history for payment in the last 12 months.
- Waiting Period- The borrowers have to wait for at least 210 days from the closing date and should be able to make 6 months payment on their current loan to qualify.
- Costs and fees- Increasing the FHA loan for paying off the associated loan is strictly forbidden.
- Net Tangible Benefit- Borrowers have to show that the refinance would result in a benefit, which would outweigh the cost of refinancing an FHA loan.
A person fulfilling all these requirements above is eligible to apply for FHA streamlined refinancing.
There are a lot of options available to a person for refinancing an FHA loan. Here are some of the available options.
- Term Refinance: Allows the borrowers with fixed or adjustable FHA loan to switch to fixed FHA loan rate mortgage.
- Cash-out Refinance: Benefits the borrowers as it allows them to take the cash out of the refinance transaction. This kind of refinancing is useful, if you wish to get a new mortgage whose value is larger than previously owed.
Using any of the above-mentioned refinancing options can help you refinance your FHA loan. Thus, if you are in need of refinancing your FHA home loan then opting for streamlined FHA refinancing is your best bet.