Refinancing a home can be a stressful and confusing process. However, there are tools out there you can use to make the process go as smoothly as possible. If you have an FHA loan or a VA loan, you could get a better deal doing an FHA/VA streamline refinance.
A streamline is when you replace your existing FHA or VA loan with a new one without many of the hoops you would normally have to jump through. An FHA/VA Streamline loan allows borrowers to expedite the process of refinancing existing loans to a lower rate. The largest benefit to the streamline is that it saves borrowers both time and money.
Types of Streamlines
There are two types of streamlines that are available: credit qualifying and non-credit qualifying. A review of your credit score, credit history, and ability to repay the loan is required for credit-qualifying loans, while non-credit-qualifying, as the name implies, does not require these steps.
Whether your finances have improved or worsened since taking your existing loan, a streamline could help save you money and time. For example, if your finances have improved, the credit-qualifying version may help get you a lower interest rate. If your finances have taken a bad turn, then an FHA/VA streamline still has you covered! A streamline refinance could be your saving grace by lowering your monthly payments.
Is it Right for Me?
To qualify for the streamline, there are still a few requirements that must be met. First and foremost, your current mortgage must already be FHA or VA insured loan. Then, you must have made all payments due in the last six months on time. However, the FHA does allow for some wiggle room if no more than one payment was thirty days late. You must wait 210 days from the closing date of your existing loan to become eligible for a streamline refinance. Essentially, the streamline is beneficial for you if you are in good standing with your current mortgage and are looking to save some money on your monthly payments.
Mortgage Insurance Premiums
One slight drawback to an FHA or VA streamline loan is that it will not outright eliminate your obligation to pay monthly mortgage insurance premiums (MIPs) that are costing you .45% to 1.05% of your loan balance annually. However, as your loan balance decreases so do your MIPs. MIPs have changed over time; if you took out your FHA or VA loan when MIPs were higher, you could renegotiate to lower MIPs by refinancing.
The Pros of FHA/VA Streamline
- Saving money through lower interest rates or lowering your monthly payments
- Less hoops to jump through to secure refinancing
- You can refinance if your home has declined in value
- Streamlining is flexible towards your economic situation
- You may be able to lower your MIPs
The Cons of FHA/VA Streamline
- You must already have an FHA or VA mortgage loan to qualify
- New Mortgage cannot be larger than current mortgage
- Will not outright eliminate MIPs
Do you have an FHA/VA backed mortgage? Lowering your monthly mortgage payments can be a lot easier and quicker than you realize. See how much you can save by calling 806.776.0991 or by texting us at 806.798.4607. We are here to partner with you and bring your financial goals to life!