Are You a Good Candidate for a Streamline FHA Refinance?

If you are in the market for a refinance, you have undoubtedly heard about the various loans that are currently offered by lenders. There are adjustable rate mortgages, those that feature balloon payments, loans which offer substantial cash-out options, and of course also the loans that change an existing 30 year loan to a shorter 15 year loan. The FHA streamline loan does not perform the same tasks as these loans, and in some cases consumers may wonder if it is truly advantageous to opt for this kind of loan, especially since there are so many other options which are far more often advertised. Lenders appreciate the business of the alternative fiscal tools simply because they stand to make more of a profit on them than on a simple FHA streamline refinance. To be considered a candidate for the FHA streamline in the first place, the home loan you currently have must be mortgage loan that is insured by the FHA. If your current mortgage loan does not meet this requirement, you will not be able to take advantage of the FHA streamline refinancing program that is offered. Secondly, you must be current on your loan. If in the past there was a late payment, you may still be able to qualify, but if your loan is currently in default, you cannot participate in the FHA streamline refinance program. Another question to ask yourself with respect to being a good candidate for a streamline FHA refinance is whether or not you need to get cash out. Consumers hoping to pay off high interest credit cards or make down payments on major purchases find this the single most frustrating aspect of the streamline refinancing aspect. Since this kind of refinance does not allow for any cash-out option – no matter how much equity in your home you might have – it is rarely chosen as a first choice. Moreover, consider if your home is close to its appraised value. If the home might appear to be at or over the appraised value, there is a chance that it cannot fall under the streamline refinancing policies. An appraisal might be ordered to determine where the property stands with respect to its appraised value. Of course, if an initial search of comparable properties shows that the home is in keeping with the general values in the neighborhood, and if the consumer has built up some equity, then lenders usually do not insist on such an appraisal. Costs are not one of the major issues with FHA streamline refinances as they might be with another loan. Of course, there are still costs and fees, but they can sometimes be rolled into the loan as long as there is sufficient equity. Some lenders advertise a no fees refinance, but the more accurate advertisement would be for a refinance that requires no out of pocket expenses. As such, these fees are either added to the loan or they are expressed in a slightly higher interest rate than what is offered to other consumers taking advantage of the refinance. Consumers who can pay these costs out of their own pockets are the best candidates for FHA streamline refinancing.