With interest rates at record lows, many borrowers are looking to refinance and take advantage of lower interest rates. However, often times this process is made more difficult or impossible due to issues that can arise, most notably the fact that the current valuation of the property is less than the amount owed by the borrower. In other words, many borrowers who are financially and/or credit worthy of a refinance can not do so, because they are upside down in their homes.
In addition, as underwriting standards have continued to tighten, many borrowers can not qualify for a refinance of a loan, even if their financial position has not drastically changed from when they were originally qualified for the loan.
However, there is a simplified option that many borrowers have taken advantage of to refinance their current home loan for a lower rate, while simplifying the process and removing many of these barriers to refinancing.That is they have obtained an FHA streamline refinance loan. Of course, the main caveat is that you must have an existing FHA loan already to take advantage of the FHA streamline loan.
For borrowers who have existing FHA home loans that are current on their mortgage, they can refinance into a lower fixed rate on their home loan, without an appraisal and without verification of income or employment. This allows many borrowers who could otherwise not qualify for a lower interest rate to take advantage of the currently record low interest rates.
As mentioned, the FHA streamline is only for borrowers with existing FHA home loans and the reasoning behind the lack of qualification has to do with the fact that if a borrower is paying on and always has paid on an FHA loan, then a reduction in interest rate and payment will of course not add any additional risk to the loan and so less factors need to be looked at to approve the loan.
In addition to having an FHA loan, the borrower must also receive no cash out and have at least 5% payment reduction as a result of the refinance in order to qualify.
For borrowers who meet these qualifications the FHA streamline refinance is a great and more simple way to take advantage of the very low interest rates in the current marketplace.
For more information on current programs for existing and potential homeowners, please contact Bill Kamboukos of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com
Comments(0)