An FHA mortgage is a loan insured by the Federal Housing Administration and is streamlined in that there is minimum paperwork required in order to complete the refinance. A streamline refinance is a great way to lower your monthly payment on your FHA mortgage. If you are thinking about doing a streamline refinance for your FHA secured loan you should know about some of the basic requirements.
Beyond the basic requirements of the FHA, some lenders have their own requirements borrowers have to meet in order for the mortgage company to refinance them. At Village Capital we offer a no cost refinance to the borrower. This means there is no out of pocket cost in order to refinance the loan. As a certified FHA streamline refinance lender, we have the ability to offer borrowers rate quotes based on current market rates. Click here to learn more about FHA Streamline Refinance Rates.
The FHA refinance program has been designed to make it simple for borrowers to ‘streamline’ their refinance process. Some of the biggest benefits include:
1. No Appraisal required: With an FHA refinance you can use the original purchase price of the home, rather than the current value. So if your home has lost value and you’re underwater in your mortgage, then take advantage of this refinance program and lower your rate or payment.
2. Along with the no appraisal benefit borrowers have the ability to take advantage of the same features other loan products have, such as a choice between a fixed rate or adjustable rate mortgage, or a 15 or 30 year loan term. If you do ever decide to pay your loan off early, there’s no prepayment penalty.
One of the biggest questions people have about the FHA refinance program is ‘do I have to have good credit in order to qualify?’ There is no verification of credit in order to qualify for the fha mortgage refinance program. On top of this benefit, FHA’s written guidelines also dictate:
- Employment Verification is not required: You don’t need a job in order to qualify for this program.
-No income verification: You don’t have to bring in income in order to qualify for this program.
- No credit score verification: We do not approve loans based off of credit scores. The refinance is approved based off of your mortgage payment history, not your credit score.
If you would like more detailed information about credit requirements, check out our FHA eligibility page.
It may sound like the FHA streamline process is too good to be true, but it’s actually in their best interest to make the qualifications as minimal as possible. This is because the fewer the qualification the more people that can be refinanced. This means more people are going to get the lower monthly payment they need in order to stay current on their mortgage. As FHA just insures the loans it’s in their best interest to help people stay current with their mortgage payments.