4 Reasons for a FHA Streamline

A FHA streamline loan is one of the most popular ways to refinance an FHA mortgage. Traditional refinancing can be tedious and require a lot of work on your part, but a FHA streamline is designed to take a lot of the hassles out of refinancing and it is only available to FHA customers. Here are a few reasons that people get an FHA streamline loan.

1. Speed

As the name FHA streamline suggests, the process is fast. It is designed to be much faster than other types of traditional loans. Therefore, when you get one, you should not have to wait around for the approval. You do your part and then the lender will let you know once you are approved.

2. Lower Payment

FHA streamline loans are designed solely for those that want a lower monthly payment or if you want to change from an ARM to Fixed rate. Refinancing with a streamline is not made for those that want to do a cash-out refinance. You will not receive any money as a result of this refinance.

For example, let's say that you had a $100,000 mortgage initially and you paid down $20,000 off of the principal. This type of loan would just allow you to get a loan for $80,000 so that you can lower your payment. You will not be able to refinance for $100,000 again and get $20,000 in cash. This can be a great tool for those that want to lower their monthly mortgage payments.

3. Less Paperwork

With a traditional refinance, you will be required to submit financial documents for a loan approval. You will fill out several pages of application, verification documents, and other necessary papers. A streamline, reduces the paperwork required to refinance. The basic requirements of the mortgage are an acceptable payment history, an existing FHA loan and valid picture and social security number validation.  

4. No Verification

One of the great things about this type of refinance is that you do not have the traditional verification requirements. With a regular refinance, they are going to check your employment, your monthly income, and your credit file. With an FHA streamline, they will do none of that. Since you are already an FHA customer, they already service and own your mortgage. They have already approved you once, and they want to help your refinance to put you in a better financial position.

Typically, even if your credit score has reduced since the time of your application, you should still be eligible to refinance. Your mortgage payment history is crucial, however, because that is one of the most important eligibility criteria they will examine.