Refinancing a mortgage can be similar to applying for your first loan. An FHA home mortgage may qualify for the FHA Streamline mortgage program, which can make it easier for you.
Benzinga has put together this guide to help you understand what you need to qualify for this mortgage product.
FHA Streamline Rates
When you consider any mortgage product, it’s important to know the term and rate. Take a look at the current rates for FHA Streamline loans.
| Product | Rate | APR |
|---|---|---|
| FHA Streamline 15-Year Fixed | 2.625% | 2.916% |
| FHA Streamline 30-Year Fixed | 2.625% | 3.537% |
Rates gathered on 7/6/2021, for the most updated rate, click here.
What Is an FHA Streamline Loan?
An FHA Streamline loan is a refinancing option available to homeowners who already have an FHA mortgage.
FHA loans are part of a homebuyer program managed by the Federal Housing Administration (FHA). You work with an approved FHA lender if you have an existing FHA mortgage.
Refinancing is a popular option for homeowners because it can allow you to lower your interest rate and payments. To refinance, you go through a similar process as when you applied for your mortgage.
The FHA Streamline earns its name because it provides a quick and simple way for homeowners to refinance their mortgage. Unlike many refinancing programs, the FHA Streamline program does not have as many requirements involved, like income verification and credit scores which allows the process to move along more quickly.
FHA Streamline Refinance Benefits
FHA loans are provided by the federal government and must adhere to specific guidelines. These guidelines require an FHA Streamline refinance loan to benefit you as the borrower. The benefit you receive from a streamline refi could be:
- Lowering the interest rate on your mortgage
- Converting your current adjustable-rate mortgage (ARM) to a fixed-rate mortgage.
A fixed-rate mortgage means that your interest rate would not change for the lifetime of your loan so you know exactly how much your mortgage payment will be each month until your mortgage is paid off.
FHA Streamline Requirements and Documents
Although an FHA Streamline refinance doesn’t have as many requirements as some other refinance products, there are some that you should be aware of. If you apply for an FHA Streamline refinance, you’ll also be required to submit the documentation outlined below.
Requirements
The first requirement that you should be aware of is that to participate in the FHA Streamline Refinance program, you must already have an existing FHA loan. This means the program can't be used to refinance a conventional loan. You also must be current on your mortgage.
Other requirements include:
- Your last 6 mortgage payments must be made on time.
- No more than 1 late payment in the past year.
- You must have made payments toward your original mortgage for 210 or more days.
- Your refinance loan must not be more than the initial amount borrowed.
- You cannot use the refinance program to obtain more than $500 in cash.
- You can only roll closing costs into the streamlined refinance if there is enough equity in the home.
- Lastly, the refinance must benefit you in 1 of the following ways:
- A point reduction of at least 0.5% in the combined interest rate and mortgage insurance premium (MIP).
- Convert an adjustable-rate mortgage (ARM) to a fixed-rate mortgage with no more than 2% points greater than the combined interest rate and mortgage insurance premium (MIP).
Documents
As with any application process, you’ll need to submit documentation when you apply for an FHA Streamline. Be sure to have these documents ready before you apply:
- A copy of your mortgage note that shows your current loan rate and term
- A copy of a recent mortgage statement to show that you meet the on-time payment requirement
- Proof of homeowners insurance
- 2 months of bank statements
Best Mortgage Lenders for an FHA Streamline
Remember, the FHA Streamline refinance program is only available to refinance FHA loans that already exist. If you qualify, you’ll probably want to start exploring some approved lenders.
Each of our recommended lenders offers a unique experience to help you save money on your mortgage.
- Online Service
1. Best for Digital Experience: Quicken Loans®
If you’re looking for a great online mortgage lender, Quicken Loans might be right for you. This lender offers several loan types and handles FHA loans frequently. The entire application process can be completed online.
If you have questions about FHA mortgages or any of its other loan products, you can get help from a Home Loan Expert through online chat, email or by phone. Unlike some lenders, Quicken Loans services the vast majority of its mortgages, so you’ll receive the great customer service that Quicken Loans is known for, even after you’ve finalized your loan.
2. Best for Traditional Bank Experience: Bank of America
Bank of America offers the convenience and customer service of traditional banking. If you’re a first-time home buyer or just prefer to work with someone in person, Bank of America means that you’ll have access to mortgage experts at branch locations near you. These mortgage experts can help walk you through the homebuy application process.
Bank of America’s customer service also includes helping you determine the qualifications for your local area, such as the maximum loan amounts for your county.
- Quick Closings
3. Best for Customer Service: PennyMac
PennyMac is an experienced direct lender dedicated to helping its customers. Its licensed loan officers are familiar with navigating each step of the home loan process.
PennyMac’s website offers a wide range of resources to teach you about FHA Streamline loans and other mortgage products. Online tools can help you calculate and compare your monthly payment amounts between the different mortgage products. Get in touch with the customer service team online or request an agent to call you.
Is FHA Streamline the Best Refinancing Option?
When you purchase a home, the mortgage options can seem overwhelming. The same goes for refinancing. Just because you can refinance with an FHA Streamline loan, should you?
As with any mortgage product, it’s always a good idea to get a quote and compare lenders before you choose. Each refinance product offers its own set of unique benefits. If you have an FHA loan and want to lower your interest rate, the FHA Streamline might be right for you. On the other hand, if you’re looking for an option that will allow you to benefit from actual money in your hands, you might prefer a different refinance product.
The best way to move forward is to enter your ZIP code and start comparing quotes and mortgage products. Don’t hesitate to reach out to a trusted lender to discuss your options and find the right home loan product for you.
Frequently Asked Questions
Q: Does FHA Streamline get rid of PMI?
A: Refinancing your mortgage with an FHA Streamline will not get rid of your private mortgage insurance (PMI). To cancel your PMI payments, you’ll need to have made at least 60 monthly payments to the FHA. Your loan balance will also need to be 78% or less of your home’s purchase price. While refinancing alone will not remove your PMI, it can reduce the amount of time before you can stop making these payments.
Q: Is the FHA Streamline a good idea?
A: The FHA Streamline program is a good idea for many homeowners who already have an FHA mortgage. If you’re considering taking advantage of it, you should do your research to determine if it will help you meet your needs. You can also reach out to licensed loan officers and lenders to discuss whether the FHA Streamline is right for you.
Q: How many times can you do an FHA Streamline refinance?
A: There is no limit to the amount of times you can do an FHA Streamline refinance if you qualify.
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