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What is a streamline refinance?
A streamline refinance is a program you can use to lower your mortgage with reduced documentation. The loan process is more efficient, and the approval process is much faster. Lowering monthly bills is a common goal, and a streamline refinance can achieve this by securing a lower interest rate or improved terms. With a reduced rate, monthly mortgage payments decrease, potentially saving hundreds of dollars monthly and thousands over the mortgage’s remaining life.
Why apply for a streamline refinance loan?
Applying for a Streamline Refinance loan can be a smart financial move for certain homeowners who have existing mortgages, particularly those insured by the Federal Housing Administration (FHA), or Department of Veterans Affairs (VA). Streamline Refinance loans offer several benefits:
Reduced Documentation: One of the primary advantages of a Streamline Refinance is the simplified application process. These loans typically require less documentation and paperwork compared to a traditional refinance. This can save you time and reduce the hassle of gathering extensive financial information.
Lower Costs: Streamline Refinance loans often have lower closing costs because they may not require a new appraisal, credit check, or extensive underwriting. This can make it a more cost-effective option for homeowners looking to reduce their interest rates.
Lower Interest Rates: If current market interest rates are lower than the rate on your existing mortgage, you may be able to secure a lower interest rate through a Streamline Refinance. This can result in lower monthly payments and potentially save you money over the life of your loan.
Easier Qualification: Streamline Refinances are designed to be more accessible for homeowners who might not meet the stringent credit or income requirements of a traditional refinance. If you’ve made your mortgage payments on time and have a good payment history, you may be eligible for a Streamline Refinance even if your financial situation has changed.
Faster Process: Since Streamline Refinances involve less paperwork and potentially fewer reviews, the process can be completed more quickly. This can be advantageous if you need to take advantage of lower interest rates or reduce your monthly payments promptly.
How does a streamline refinance mortgage work?
These loans can really help you if you’re not sure of your home’s value. But also, your income may have changed since getting your original mortgage and you’re worried about refinancing. A streamline refinance works by paying off your current home loan with a newer mortgage with more favorable terms. This could be a lower rate to save monthly or a shorter loan term like a 15 year mortgage so you save interest over the life of the loan. The balance that remains is what your new monthly mortgage payment will be based on.
Who qualifies for streamline refinance?
These programs are designed to make the refinancing process more accessible and less burdensome for eligible borrowers. The specific qualifications for streamline refinance programs can vary depending on the type of loan you have and the agency that backs it. Here are some general guidelines for each program.
FHA Streamline Refinance Requirements:
- You must have an existing FHA loan.
- Your mortgage payments must be current with no more than one 30-day late payment in the past 12 months.
- The refinance must result in a lower monthly principal and interest payment or convert an adjustable-rate mortgage to a fixed-rate mortgage.
- No appraisal is required.
- Must be current on your mortgage with no late payments in the past 12 months.
- Credit score 620+
VA Interest Rate Reduction Refinance Loan (IRRRL) Requirements:
- You must have an existing VA loan.
- The refinance must result in a lower interest rate.
- No appraisal is required.
- Must be current on your mortgage with no late payments in the past 12 months.
- Credit score 620+
- You typically need a certificate of eligibility (COE) from the VA.
5 Simple Steps for Refinancing Your Home
If you are planning to refinance this is a must read guide. It will walk you step-by-step through the process and let you know what to expect along the way.
See GuideTypes of streamline refinances loans
Here is a brief summary of the streamline refinance types and the best features of each of them.
VA IRRRL Streamline Refinance
VA Streamline is a great option if you’re an active military member, veteran or spouse who meets the eligibility requirements. If you’re in a VA loan and would like a lower interest rate or a shorter mortgage term then VA has made it easy for you! This program is available if you’re a homeowner covered under the VA Loan program. The program’s name is the Interest Rate Reduction Loan (IRRRL) backed by the Department of Veterans Affairs.
VA Refinance Features:
- No appraisal required
- No income Check
- Primary, secondary, and investment allowed
- Defer two mortgage payments
- Get an escrow refund (property taxes and insurance)
- Less paperwork
- No Mortgage Insurance
- Close in 2 weeks
- Competitive Interest Rates
FHA Streamline Refinance
Are you currently in an FHA mortgage with an above average market rate? If you fall into this scenario then FHA streamline refinance might be the program you have been hoping for. This loan can lower your monthly mortgage payment all without the need for an appraisal. You can easily qualify for an FHA Streamline loan due to its flexible guidelines and its simple done-for-you process. If you’ve been on the fence, and hold an FHA loan, then you should consider an FHA Streamline to drop your payment even your mortgage term.
FHA Refinance Features:
- No appraisal required
- No income check
- Defer two mortgage payments
- Get an escrow refund (property taxes and insurance)
- Flexible FHA Guidelines.
- Close in 2 weeks
- Competitive Interest Rates.
- Quick Closings
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