New FHA Streamline Refinance Program Enables Millions to Refinance
As of June 11, 2012, the Federal Housing Administration (FHA) will allow homeowners to save even more money on their home refinances. All home owners who have an FHA loan are now being given the opportunity to refinance their mortgage without any closing costs or up-front fees.
The FHA has traditionally offered refinance options but with a cost; most refinances cost upwards of $3,000 in closing fees and dues at the time the refinance is finalized. The new FHA streamline removes all fees and charges, enabling those who are currently paying on an FHA loan the chance to start saving money immediately.
The old FHA refinance required an up-front insurance premium, which cost approx. 1% of the value of the loan. This fee, which made up the majority of the up-front costs, has been slashed to just .01% of the total loan value, saving home owners thousands on the cost of a refinance. In addition, the FHA guaranteed private mortgage insurance (PMI), cost was previously charged at the rate of 1.10%, has been reduced to just .55% of the loan value. These cost reductions will save the typical home owner about $3,000 on fees.
Qualifying for the new FHA Streamline
The qualifications for the new FHA streamline refinance initiative are almost identical to the requirements for the old refinance program. In order to qualify, borrowers must first have an FHA home loan. Non-FHA loans will not qualify for this refinance. Additionally, borrowers must be current on their home loan and have had the loan for at least 12 months. The loan must also have been endorsed on or before May 31, 2009.
Some of the best benefits of the streamline refinance are that it is designed to be approved very quickly. Qualifying borrowers who apply for a streamline refinance are allowed to refinance their home loan to a lower rate without any qualifying checks. The program allows borrowers to refinance without a credit check, income verification, employment verification, or home appraisal. The original home appraisal price is used to determine the new loan rate, and dropping the need for a home appraisal saves time and money.
The FHA estimates that there are currently over 3.4 million households in the US that have a loan interest rate of at least 5% that would qualify for the new streamline refinance program. This is an estimated savings of over $3,000 a year, or $250 a month for those who qualify for and take advantage of this program. In addition, because the FHA guarantees the PMI on these properties, there is no additional underwriting required, saving even more time and money.
The new streamline refinance program does not allow for cash-out refinance options, but it does allow for homeowners to save hundreds each month on their home loans. Apply now and see how much you can save.