Everything You Must Know About FHA Streamline
As the economy has improved, lenders have become more willing to lend money to buyers to refinance their homes. One way in which you can refinance your home is with an FHA streamline. When you enter into this type of loan, you must understand the specifics of how it works so you can make sure that it is the right type of loan for you.
An FHA Streamline Can Be Very Efficient
An FHA streamline is as efficient as you can get. You do not need an income check or an appraisal. This helps to reduce much of the time that you need to obtain the loan and also allows you to avoid paperwork and the extra fees associated. Because your property has already been valued, much of the work has already been done.
You May Not Be Approved
While it may be easier to receive an FHA streamline, there is no guarantee that you will be approved. If you would like an FHA streamline, you must not already be delinquent on your current FHA loan.
You Cannot Use FHA for Fast Cash
You are not allowed to take out more than $500 in cash from the refinance. As a borrower, you will not receive a cash payout like you would with other traditional forms of refinancing.
You Shouldn't Use an FHA Streamline for Closing Costs
Your current mortgage must have been issued at least six months ago. You're not allowed to increase your loan amount to cover the closing costs. If you closely examine the closing costs, you may notice that there are some fees that are unnecessary and you may be able to have them removed. You should speak with the lender to find out if you can negotiate away some of the closing costs. Also, if the closing costs are really high, find out if the seller will lower the price of the home to offset the closing costs. If you close at the end of the month, you may be able to reduce your insurance costs.
The FHA Must Be Beneficial to You
One of the great rules about FHA is that they are required to be beneficial to the buyer. In the past, the refinance only needed to lower the monthly payment, but now they also need to lower your interest rate. Otherwise, the interest compounded over several years can outweigh the benefits. This type of loan should not be used simply as a way for the lender to increase profits.