If you’re looking for a quick refinance that’s safe and secure and where you also don’t have to verify many documents, FHA Streamline refinance is your best option. Not to mention that it has also become a great cushion for all those lenders because the official website constantly updates the interest rates and indicates the most competitive ones.
There is a lot of talk that refinancing can be a bad idea because of the interest rates that tend to increase. However, in FHA rates it is completely the opposite; for that reason, more and more people are interested in joining this new financing modality without a moment’s hesitation.
Previously, it was common to ask about lenders to refinance, refinances with negative escrow balances, and what the score needed to refinance a house is. But focusing on everything to do with FHA is the best option.
What are the benefits of FHA refinances?
In general, there is not a lot of information about the benefits of refinancing itself, but FHA does have several of them. Since it has established itself as a new trend for lenders who want to refinance their loans, it is important to be aware of all the benefits it brings.
Lower MIP and Refinance Rates
One of the most outstanding aspects of FHA refinancing is that it has one of the lowest rates in the mortgage area; its average is only 6.75%. Not to mention that it also has one of the lowest MIP rates thanks to its streamlined refinance system.
| Product | Interest rate | APR |
| 30-year fixed-rate | 6.983% | 7.056% |
| 20-year fixed-rate | 6.825% | 6.917% |
| 15-year fixed-rate | 6.080% | 6.210% |
| 10-year fixed-rate | 6.102% | 6.342% |
| 7-year ARM | 7.218% | 7.705% |
| 5-year ARM | 7.019% | 7.722% |
| 3-year ARM | 6.125% | 7.204% |
| 30-year fixed-rate FHA | 6.387% | 7.243% |
| 30-year fixed-rate VA | 6.042% | 6.428% |
So if you still have doubts about whether to opt for this option or not, now you can be sure that you can make a completely safe refinancing without worrying about their interest rates.
MIP Refunds
If you own a home purchased through an FHA Streamline refinance, you can opt for a MIP refund without any problems. This works as follows: in case you own a home through this payment method, you can apply for MIP reimbursement and receive up to 68% of the prepaid mortgage insurance amount.
It is mostly done as a form of discount for the new MIP of the loan; so yes, it is very beneficial to do this type of refinancing without any doubt.
You don’t need income, credit, or job verification
One of the parts that make most people hesitate when they want to apply for a refinance is the time to verify all this information. Besides being a rather tedious process, it can take months, and occasionally the loan can be denied, which translates to a total waste of time.
Here we will show you some conditions in which you can be without having difficulties with the acceptance or validation of your mortgage loan.
- The loss of a recent job may be a compelling reason to be turned down for a loan, but at FHA it is not. You may be fully eligible for financing
- The same goes for credit history; if your credit history is very low and you have been denied loans at other financial institutions for that reason, you won’t be eligible
- It doesn’t matter if your credit is low because FHA uses the no-credit qualification option so that everyone can enjoy this benefit without discrimination
What does FHA simplification consist of?
Let’s say it’s an extension into FHA refinancing itself. By streamlining it, lenders have the option to opt for better interest rates with a lower percentage for their monthly payments.
They would be completely replacing their existing loan with this new financing and the new loan policies with the rate adjustment.
Among the benefits that you can find with FHA simplification is that you have the opportunity of making lower monthly payments; this is possible because you will be securing a lower interest rate and you also have the option of extending the payment term up to 12 years when you go from an adjustable rate to a fixed rate.
Another significant aspect is that, usually, when you apply for a loan or financing to buy a home, an appraisal is required, but at FHA you don’t need to request this information.
Whatever the price, you can get the amount of money you need, and if you need to refinance, you will not be penalized.
When should you refinance an FHA loan?
There is really no regulation or any signal for you to refinance your FHA; they will simply be publishing lists of the lowest interest rates and MIPs from time to time. In this case, it will all depend on whether the person really wants to opt for the streamlined refinance to have the possibility to pay a little less.
But by itself, the benefits you will have with FHA financing are more than enough compared to any other mortgage loan.
Many even more so should you decide to go for the simplified FHA to obtain greater benefits such as being able to expand their total loan payment terms or have a fixed interest rate.
References
-
“Compare FHA Refinance Rates – NerdWallet.” NerdWallet, https://www-nerdwallet-com.translate.goog/mortgages/refinance-rates/fha?_x_tr_sl=en&_x_tr_tl=es&_x_tr_hl=es-419&_x_tr_pto=sc
-
“Helps Existing FHA Borrowers Refinance to a More Affordable Mortgage.” FDIC, https://www.fdic.gov/resources/bankers/affordable-mortgage-lending-center/guide/part-1-docs/streamline-refinance.pdf
-
“Streamline Refinance Your Mortgage | HUD.Gov / U.S. Department of Housing and Urban Development (HUD).” HUD.Gov / U.S. Department of Housing and Urban Development (HUD), https://www.hud.gov/program_offices/housing/sfh/ins/streamline