Streamline refinancing is a type of mortgage option that is provided through the Federal Housing Authority (FHA) in the United States. The purpose of this mortgage refinancing service is to aid homeowners who already have a mortgage with the FHA and would like to refinance the loan for some reason. In order to qualify for the refinancing, candidates must comply with the criteria outlined by Federal Housing Authority, including a history of making payments on time for the past twelve months.
One of the benefits of streamline financing is that fact that qualified candidates can obtain a refinanced mortgage without having to go through all the steps required with a first time mortgage. In most cases, there is no need to go through a second home appraisal, and there is usually no need to resubmit verification of employment or current income level. Since one of the qualifications for the refinancing is having an existing FHA loan that is in good standing, much of the paperwork involved with the original loan can be used as source material for writing the refinanced mortgage, saving a lot of time and effort for both the lender and the homeowner.
There are several reasons why streamline refinancing may be a good strategy for certain homeowners. For those with underwater mortgages, or mortgages that have a balance higher than the current market value of the home, the refinancing makes it possible to lock in a lower rate of interest than the rate associated with the original financing. This in turn can translate into saving a significant amount of money over the course of the loan. As part of the arrangement, the homeowner may also extend the terms on the mortgage, making it possible to lower the amount of the monthly mortgage payment. Doing so can be helpful when the household is recovering from some sort of financial setback and the reduced payment would make it easier to remain current on all debt obligations.
As with any type of mortgage refinancing, streamline refinancing may not be the best approach for all homeowners with an FHA mortgage. Unless the action will substantially reduce the rate of interest or make it possible to restructure the amount of the installment payments in a manner that is beneficial for the household, the measure may not provide enough benefit to make the refinancing worthwhile. In addition, not all lenders offer streamline refinancing for their FHA loan customers, meaning it may be necessary to work with a different lender, something that may not be desirable if the homeowner has a positive relationship with the current lender.
