Is Streamline Refinance Good For You?

If you’ve already gone through the process of applying and getting approved for a home loan, you know all about the time and work that is put into it. Sure it was necessary, but it’s one of those things you don’t really want to do again anytime soon.

A couple of years have passed, you’re in a better situation financially, and you know refinancing could save you hundreds of dollars on your monthly payments, but you just can’t bring yourself to go through the grueling process again. What if there was an easier way? Streamline refinancing offers you the opportunity to refinance your house, lower your interest rates, and save money, all in a quick simplified way.

What is Streamline Refinance?

Simply put, it is a refinance option that is easier and faster than conventional refinancing. It speeds up the refinance process by eliminating a lot of paperwork and underwriting required while increasing your chances of being approved.

Use streamline home refinance to reduce your interest rates and monthly payments quicker than usual.

Types of Streamline Refinance

Depending on your type of home loan, you may be eligible for one of these options.

  1. FHA streamline refinance
    This popular option allows you to refinance your FHA mortgage, and enjoy lower interest rates, without having to do an appraisal. It doesn’t require a credit check and also comes with minimal paperwork and documentation. Virtually all borrowers qualify for this refinance even without sufficient income or assets.Make sure you are up to date on your payments and that you haven’t been late on any in the last six months. Your new interest rate must be lower than your current rate, or else you can switch from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage (FRM) using this option.
  2. VA streamline refinance
    The VA streamline refinance or IRRRL (Interest Rate Reduction Refinancing Loan) is another refinance option. To be eligible, you must currently be a VA Mortgage loan holder, or at least be eligible for one. You can use this to lower your interest rates or to switch from an ARM to a FRM.If you have a FHA or other traditional mortgage, you can use the VA streamline refinance option to remove PMI (private mortgage insurance), lower your interest rates, and reduce your monthly payments.
  3. HARP streamline refinance
    In certain situations, you might find that the amount you owe on your mortgage is higher than the value of your house. For example, you can take out a $300,000 mortgage loan with 100% financing, but after a few years find out that your house’s value has dropped to $250,000. In this case, if you sell the house, you will suffer a loss of $50,000. That type of mortgage is known as an underwater mortgage.With the HARP streamline refinance option, you can refinance this underwater mortgage, as long as your loan-to- value (LTV) ratio is not less than 80%. This will help you bring down the amount you owe so that it is closer to the value your house if currently worth.To be eligible for this type of refinance, you must be up to date on your loan, and it must be owned by Fannie Mae or Freddie Mac. There shouldn’t be more than one default payment within the last 12 months, and zero default payments within the last six months.

Is Streamline Refinance Good?

The current opinion from homeowners all across the country is an overwhelming yes.

  • Your fees and closing costs will be lower.
  • It doesn’t require an appraisal.
  • The streamline refinance option takes a lot of legwork, documentation, and paperwork away, which makes it easy for homeowners to qualify for refinancing with very little effort. This results in faster processing time.

The only downside is that you’re not eligible for a cash-out option with streamline refinancing.

This means, if you want to take out money right now against your house, this is not the option for you.

Some Basic Streamline Refinance Guidelines

Credit requirements: while a FHA streamline refinance doesn’t have any credit requirements; lenders may still run a credit check. Most lenders would like to see a score of 620 or higher, but can often work with lower FICO scores as well.

Rates and costs: rates vary between lenders, but are at the lowest they have been in a long time. Find a lender that offers you the best conditions and see how you can roll your streamline refinance closing costs into the new loan so that you can enjoy a ‘no cost’ refinancing.

Appraisal: you can do a streamline refinance without an appraisal. Jumbo loans: because jumbo loans carry a higher value than most conforming loans, it may be a little more difficult to get a refinance for a jumbo loan. It is still worth looking into though, since even the smallest decrease in interest rates, with these large amounts, can save you a lot of money.

Income and assets: when you submit your refinance application you will most likely have to show documentation of your income and assets. If they’re not in tip-top shape, you can always add on a co-borrower to secure the loan.

Should I Do A Streamline Refinance?

There has never been a better time to do streamline refinancing than now. With current mortgage rates at record lows, you can reduce your interest rates and mortgage payments significantly through refinancing.

However, if you have already paid off a substantial part of your loan, it might not make sense if the cost of refinancing will be more than the money you save for the rest of your term. Our experts at TJC Mortgage are happy to review your situation with you.

Where You Can Get Streamline Refinance

So who does streamline refinance? The same lenders who offer mortgage loans also offer streamline refinance. The best thing to do is shop around for a lender who offers the best terms so that you save a significant amount. Let us work with you today and find out just how much you stand to save by putting your details into our streamline refinance calculator.

Disclosure: Even though a lower interest rate can have a profound effect on monthly payments and potentially save you thousands of dollars per year, the results of such refinancing may result in higher total finance charges over the life of the loan.