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FHA Refinance Loans

posted Jan 9, 2011, 4:57 AM by Massey Kouhssari

FHA Mortgage Refinance

While FHA mortgages are most often associated with helping first-time home buyers with the new Financial Reforms, there are still many options available to homeowners. The simplest solution is to contact us, or click on the Request a Quote tab, and we’ll be more than happy to over your options with you.

Since 1934, the FHA has helped some 35 million people become homeowners. An FHA mortgage may be just what the doctor order and could quite possibly change your live. Refinancing is broken into two categories, qualifying and non-qualifying. With a traditional refinance, your loan is based on certain criteria. First being the LTV (loan-to-value). This is established by dividing the loan amount into the appraisal value. Second, it must be established if your goal is to take cash-out or do a straight rate and term refinance. This is best described as wanting to pay off the existing principle balance adding the closing costs in hopes of reducing either your term or current interest rate. For a quick response, click on Request a Quote we would happy to assist you if refinancing your current mortgage makes sense.

What is the FHA Streamline Rate Reduction that I have heard about?

If you currently have an existing FHA Mortgage, the Streamline Rate Reduction Refinance Program could be your opportunity to take advantage of the historically low rates and better position either by paying off your mortgage quicker or just reducing interest rate effectively lowering your payment. The FHA Streamline was introduced in the early 1980s with the intent of enabling current homeowners to obtain a lower interest rate with little or no out-of-pocket costs. This program is considered to be the best options by today’s standard, for refinancing as there is minimal paperwork and little if no hassles. It is truly a fast, effective, low-cost method of refinancing your home loan that offers the benefits of lowering your rate of interest and lower monthly payments. However, there are some restrictions, depending on your LTV (loan-to-value) this will determine whether or not you can finance your closing costs or opt for a No-Cost Option. This can be easily determined by Calling 877-410-6663

What is a No-Cost FHA Streamline Mortgage?

In the event you do not have sufficient equity in your home as is the case for many of us, or you lack the funds to meet all closing costs or expenses associated with refinancing, you may consider a no-cost option. A "No Cost" FHA streamline refinance loan lets you refinance your mortgage with absolutely no out-of-pocket expenses. There are two options in this type of Federal refinancing:

  • The lender pays the costs but does this in exchange for a higher interest rate.
  • The lender and the borrower split the costs, resulting in lower rates.
  • Or include as much of the closing costs as possible into the new loan and the lender covers the rest.

Considering FHA Streamline Refinancing? 

  • The borrower's original loan must be a Federal loan (insured)
  • The principal and interest rate payments of the previous mortgage payment must be lowered by a minimum of .500% from the existing the FHA Mortgage
  • The borrower must have had the mortgage for at least six months. The mortgage must be up-to-date at the time of refinancing, that is, the mortgage must have been paid as agreed for the last twelve months
  • The borrower cannot receive back any cash from the loan proceeds
  • An appraisal is required only if the closing costs are rolled into the new loan
  • FHA Streamline Refinance without an appraisal is limited to: unpaid principal balance - refund credit of the mortgage insurance premium + new upfront mortgage insurance premium, if it is to be financed in the mortgage
  • A termite report is not needed
  • If there are any other liens on the property, they must subordinated to the streamline FHA refinance loan.
  • If the borrower has any federal debts, he must not be late, delinquent or in default

Prior to securing FHA streamline loan it is important to consider the costs and the long-term impact of such loans. There are many options in the FHA refinance program that narrowing it down to the best option is a difficult task. Here we can help you. Spare a few seconds to fill out our Request a Quote form and we will study your requirements and will find you best mortgage program that fits your particular needs.