Are you looking to simplify the complex world of home loans and refinance programs? If your mortgage loan is backed by the Federal Housing Administration (FHA) and you are currently paying more than you think you should be for your Salt Lake City home, then FHA streamline refinance might be for you.
The FHA streamline refinance program is available to homeowners who are paying a higher interest rate for their FHA home loan than the current rate. It is also available to homeowners whose residential property value has depreciated since closing on their FHA loan. If either of these situations is familiar to you, consider applying for an FHA streamline refinance. It might just save you some time and money.
Here is what you should know about the refinance program:
What Is FHA Streamline Refinance?
FHA streamline refinance is a mortgage refinancing option offered by the federal government. It aims to simplify mortgage terms and lower the payments made by homeowners with an existing FHA loan. As such, the program effectively reduces the homeowner’s principal payment and interest rates. After the reduction, you can take out a maximum of $500 in cash on the refinanced mortgage.
The streamline refinance program does not require a re-appraisal of your home. But you still have to meet the FHA’s debt-to-income (DTI) requirements. Calculate the DTI ratio by dividing your total monthly debts with your gross monthly income. Borrowers are limited to a 31-percent ratio.
How Do I Know If I Qualify?
Not all homeowners qualify for an FHA streamline refinance. The first and foremost qualification is that you must have an FHA-insured loan. There are no exceptions to this rule even if you secured your mortgage from other federal government agencies like the Veterans Administration.
Here are the other basic qualifications for the refinance program:
- You must have made full and on-time mortgage payments in the last 12 months.
For any loan to be approved, you have to prove that you can pay for it. Similarly, you must show the FHA that you are current with your mortgage payments. If your records show that your payments have not been not on-time and in-full within the last year, then you might not qualify for a streamline refinance.
- You must have had your current FHA mortgage for at least 210 days.
You cannot apply for FHA streamline refinance on a whim. If you previously closed a refinance, you have to wait at least 210 days before applying for the FHA program. You must also have made at least 6 payments on your current mortgage program.
- Your refinance application must be financially reasonable.
The purpose of a streamline refinance program is to reduce your monthly payments or to switch from an adjustable-rate mortgage to a fixed-rate loan. It is not a solution if you want to cash out the equity in your home.
Piles of paperwork, endless phone calls, and never-ending fees — these are the factors that typically complicate the home refinance process. But, if you have an FHA mortgage loan, you can avoid some of that with an FHA streamline refinance program. Get in touch with your local lender, today, to clarify your unique concerns regarding the program.