Pennsylvania Mortgage Advisors

What is an FHA Streamline refinance?

The FHA Streamline Refinance is a loan program available to homeowners who have an existing FHA mortgage, to help them reduce their mortgage payments. This helps out families who are under water on their mortgage. The FHA will refinance the mortgage, and do so without penalty.

How does the FHA Streamline save me money?

HUD lowered the Mortgage Insurance Premium (MIP) from 1.35% to .85%.  If you are paying a monthly mortgage insurance premium on an FHA loan, you could refinance with the FHA Streamline and save money. Here is an example of lower monthly mortgage payments with the FHA Streamline Refinance on a loan balance of $250,000.

Previous MIP
at 1.35%
Current MIP
at .85%
Monthly MIP (mortgage insurance premium) $281 $177
Monthly Savings $104

That's a savings of $1,200 a year over the remaining life of the loan! And if mortgage rates have decreased since you took out that initial loan, you could stand to save even more.

How is it different from other refinance programs?

The FHA Streamline does not require a home appraisal, and accepts the original purchase price as the home’s current value, regardless of actual worth in the current market.

Are there other differences?

Apart from not requiring a home appraisal, the FHA Streamline Refinance loans act much the same as other loans. They are available with a fixed or adjustable rate, with both 30 and 15 year terms.

What are the eligibility requirements for the FHA Streamline?

The FHA has some minimum standard requirements in order to be eligible for the FHA Streamline Refinance, including a verbal employment verification, but they are not as stringent as you may think. The FHA will insist on good payment history, looking for timely mortgage payments on a consistent basis over the last 12 months. Some lenders may require a minimum credit score.

Like any loan program, there are other limitations and fees that apply to the FHA Streamline Refinance program. If you think the FHA Streamline Refinance can help you, it’s best to speak with a mortgage professional to check eligibility and get a few rate quotes from different lenders.

Finally an option for “underwater mortgages.”

Here is a scenario that has happened to many homeowners. They have been making timely mortgage payments on their home for a few years, paying down their debt on schedule. However, home values have fallen, and homes in their area have really taken a hit. They have considered refinancing to take advantage of the low interest rates, but they have little to no equity in the home. Or, they have negative equity. They are under water.

There are many families that find themselves stuck in this situation because they can’t sell without losing money, and because of the depreciated home value, they can’t refinance into more favorable terms. But now there is an option. The FHA Streamline Refinance. If you’re under water with your mortgage, or would like to save money on your monthly mortgage payments, give us a call. Even if you don’t have an FHA loan, you can refinance into an FHA loan and borrow 97.75% of your home’s value.

A mortgage professional and financial coach can help you determine if the FHA Streamline Refinancing program makes sense for you. They will help you get pre-qualified for a home loan, and shop the marketplace for you, and present you with the best home loans available in Pennsylvania.