Are you considering refinancing your FHA mortgage? The FHA Streamline program has become a popular option for refinancing, but it’s important to consider the FHA Streamline program pros and cons to decide if this is the best fit for you.
Let’s discuss the FHA Streamline program pros and cons as well as how the program works and the qualification requirements of the program.
What is the FHA Streamline Program?
The FHA Streamline program is a way for homeowners with an FHA home loan to refinance their mortgage more quickly and conveniently than traditional refinancing processes.
With this program, you can refinance your mortgage to take advantage of lower interest rates to reduce your monthly payments and pay less in interest over the term of your loan. And the FHA Streamline program allows you to refinance without the time-consuming income verification, underwriting, and home appraisal that refinancing typically requires.
Do I Qualify For an FHA Streamline Refinance?
To qualify for an FHA Streamline Refinance, you:
- Need to have an existing FHA home loan.
- Must have a history of timely mortgage payments, with no late payments in the last 3 months.
- Cannot have purchased the home or refinanced the home within the last 210 days.
- Must gain a clear financial benefit from the refinance.
FHA Streamline Program Pros
Here are the main advantages of the FHA Streamline Program:
- The application process is streamlined for quicker, easier refinancing. Most refinancing programs require a complete review of your current finances, including credit checks and verification of income. The FHA streamline does not.
- You can skip the home appraisal. Unlike traditional refinancing, the FHA Streamline program does not require a new appraisal of the home’s value.
- There is no maximum Loan-to-Value (LTV) ratio. You can qualify for an FHA Streamline refinance even if the loan is more than 97% of the home’s current value.
- There is no borrower income limit. You can qualify for this program, regardless of your current income levels.
FHA Streamline Program Cons
Here are the potential disadvantages of the FHA Streamline Program:
- You must have an existing FHA mortgage to qualify. If your current mortgage is a conventional, VA, or USDA loan, you are not eligible for an FHA Streamline refinance.
- You cannot pull cash out of your home equity. Cash-out refinancing is an option for homeowners who need to tap into their home equity to put cash in their pockets. But this option is not available with the FHA Streamline program.
- A Mortgage Insurance Premium (MIP) is required. Even if you have more than 20% equity, you must pay the MIP.
- Closing costs must be paid upfront. You can’t roll your closing costs into your new home loan.
Now that you know the FHA Streamline program pros and cons, you can decide if this is the right refinance option for your unique situation. If you’re ready to apply for a refinance, you can start your loan application with OVM Financial online. And if you have more questions about refinancing your home loan, we’re happy to answer them for you. You can reach us at 757-296-2148 to speak with one of our qualified representatives about your options.