lowrate.com

Today’s Mortgage Definition is: FHA Streamline Refinance

FHA Streamline Refinance – A Simple Definition:
The FHA streamline refinance is a refinance program designed for people who currently have an FHA loan to be able to take advantage of lowering their interest rate when rates drop with less documentation than a “normal” refinance requires.  The term streamline refers to the reduced documentation requirements that are designed to streamline the process.

FHA Streamline Refinance – An Expanded Definition:
As interest rates have fallen to the lowest point in decades, many people who can are thinking about refinancing. With the FHA streamline program, there are 2 main options: an FHA streamline refinance with appraisal and an FHA streamline without an appraisal.

For many people who are in an FHA loan and owe more on their mortgage than their house is worth, the FHA streamline without appraisal makes it possible where they can possibly refinance. When you refinance in the FHA streamline program and choose the “no appraisal” option, according to a recent rule change by HUD you can no longer roll the closing costs into the loan. This means that you will need to be prepared to bring in your closing costs – or – possibly have the lender cover a portion of your closing costs in exchange for a slightly-higher-than-market interest rate.

If you refinance with the FHA streamline with appraisal, you can still roll in your closing costs if need be and it is sometimes referred to as a “no out of pocket closing costs refinance”.

Regardless if you participate in the FHA streamline refinance program and go with the “no appraisal” or “with appraisal” option – the key is that you need to lower your interest rate enough for it to make sense. When considering whether or not it makes sense to refinance, be sure to consider how long you will be in the property, what your total closing costs will be and how much monthly savings you will realize by refinancing.

The easiest way to calculate these numbers as to whether or not it makes sense?

Talk to your loan officer. Great loan officers can easily help you know whether it makes sense in your situation.