FHA Loan Program
If you currently own a home for a few years there is very good chance you are also the owner of an FHA mortgage. The FHA loan programs are our Great Nation’s most popular loan type. They offer many programs but because of the terms offered and the more flexible qualifying standards they remain extremely popular. Especially for first-time homebuyers, according to FHA minimum guidelines a borrower can obtain financing with as little as 3.5% down payment. This is a nice start for the first time homebuyer with limited resources to purchase their first home. However, near the beginning years of the purchase there is little equity so the thought of a refinance for cash out would mean quickly dissolving any equity held in your home. The good news is for a homeowner that has held their home 3 to 5 years in recent months as of this writing available homes for sale is limited. In other words the less inventory of homes have driven the prices of homes available up and this has had positive impact on current homeowners equity position and their homes have appreciated increasing in value considerably. The difference in a few months or a year over year can make up for lost unrealized gains in the past. According to FHA minimum guidelines a borrower can obtain financing with a minimum FICO score of 580 and still only be required to have a 3.5% down payment. Keeping this in mind if you are a current FHA Mortgage holder based on the slowly improving economy but the lack of inventory of homes available for sale you could be sitting in a great position to refinance, even if you do not want or have need to pull cash out of your equity the current interest rates are extremely low. In 2005 interest rates dropped to 5% for the first time in over 20 years and in 1995 the average interest rate was 9.6% and in the 1980’s interest rates hovered well above 10%. Given these historical facts it is possible to refinance a mortgage for 4% or less.
What Is FHA Streamline Loan?
First things clear, FHA does not lend money, does not refinance new loans. FHA guarantees loans issued by approved FHA lenders and every loan issued must follow FHA minimum guidelines. An FHA guarantee means in the unfortunate event a borrower cannot fulfill their financial obligation and defaults on the loan they guarantee the loan to the lender, this is a great deal for the lender and it is passed on to the borrower. If you are a current FHA insured mortgage loan holder and the current interest rate is significant, you may want to look seriously into refinancing your FHA loan with a FHA Streamline Loan. The name FHA Streamline alone suggests QUICK, cutting of the red tape. In some sense that is true but qualifying for any mortgage is not a few days involved, the loan still has to go through underwriting meaning they insure all the guidelines are followed. Here are some of the requirements for a fast track FHA Streamline Loan that allows the borrower to refinance their current FHA Loan with another FHA Loan at a lower rate without paying for another appraisal. Currently an appraisal costs several hundred dollars, so this is an immediate cost avoidance.
- Currently a FHA Mortgage Loan Holder
- All borrowers on the original FHA Mortgage Loan need to be on the FHA Streamline Loan
- Borrower MUST have been timely on mortgage payments for the past 12 months, no late payments. You can be late on other credit obligations but not on your mortgage payment.
- No income verification is required
- No appraisal s required
- No credit scores are required, however if you have exemplary credit scores, it can be included to get the best possible interest rate. (FHA Streamline Loan programs reward borrowers with high credit scores)
- No credit scores are required allows homeowners with low credit scores or derogatory credit, recent late payments, recent derogatory credit to qualify for a FHA Streamline Refinance Loan.
- Loans are not FICO Score driven and borrower can still qualify with poor credit scores
- No money out of pocket for borrower and no closing costs.
- Most FHA Streamline Loans can close in 21 days or less.
Turn Around Time for FHA Streamline Loan is Fast
For those who are sitting in this fortunate position and holding an FHA mortgage at a higher rate during these times of historically low interest rates this FHA Streamline Loan may be what you are looking for to ease the monthly financial obligation and over a period of time you could save thousands of dollars. If you are currently a FHA insured Mortgage holder at a higher rate an FHA Streamline Loan requires no appraisal, no credit scores and no income verification. No money out of pocket for the borrower, meaning the closing will be a lot less stressful. Every loan has paperwork that slows things for the underwriting but the FHA Streamline Mortgage has limited amount of paperwork. Let’s go over this again, you can have recent late payments, recent derogatory credit but NOT on your FHA mortgage to qualify. You must have paid your FHA Mortgage timely. FHA will allow 1 30 day late payment in the last 12 months but for the record, keep your mortgage current. There are no minimum credit scores, this loan program is not credit score driven but if you have exemplary credit and high FICO scores the Larry Stepp Team at Gustan Cho Associates will present them and negotiate for the best possible rate. There is no appraisal required with a FHA Streamline Mortgage loan. There is no income verification so there is not Debt to Income ratios to contend with.
Are you Ready to get Started on the FHA Streamline Loan?
There are many documents that will need to be requested, items like your recent FHA mortgage billing statement, your HUD-1 Settlement Statement and a copy of your mortgage note. All of these items are relatively easy to obtain and the Larry Stepp Team at Gustan Cho Associates can guide you through the process. As mentioned most FHA Streamline Mortgage Lenders can process, move through underwriting and close within 21 days from the date a borrower signs the mortgage loan application and received the mortgage loan disclosures.
The Larry Stepp Team at Gustan Cho Associates is available 7 days a week, holidays and weekends. We look forward to assisting you.