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- What Are Netting Escrows & How Does It Work?: The Best Guide - January 2, 2024
- The Secret About Prescriptive Easement: Top Guide 1 Must Know - December 4, 2023
- About Home Equity Loans In Texas And How Can One Obtain It - November 27, 2023
About FHA Streamline Refinance
Many options are available in the market when you think of refinancing your home mortgage. When it comes to FHA loans, people may get confused about whether to refinance their FHA mortgage.
In this post, we will discuss what the program is, how it works, and what you should expect. Our intention in this post is to help you to make a well-informed decision whether or not FHA streamline refinance in Texas is right for you.
What is FHA Streamline Refinance?
The FHA Streamline Refinance in Texas is a refinance program for current FHA borrowers. This program allows you to lower your interest rate to the current market rates, which are significantly lower than they were last year.
This program helps you to refinance without having to requalify and without having to order an appraisal. This is one of the quickest and easiest loans available in the market at this time.
When you decide to refinance with the FHA streamline refinance program, it considers your original purchase price as your current home value.
Apart from the appraisal waiver, the program gives you options to choose between fixed and adjustable rates and 15 or 30 years without prepayment penalties.
How it works
To get qualified for FHA streamline refinance in Texas, there are specific guidelines that a lender follows. The first and the most important one is, your current mortgage should be FHA insured.
The second qualifying parameter is, you should have made at least six monthly payments towards your original loan. The next thing the lender would look at is if you have never been late on your payments in the past six to twelve months.
FHA loans do not need to verify the credentials. However, some lenders may set their benchmarks for the same. You might want to check this with the lender that you are planning to work with.
The next parameter FHA requires is that the borrowers should make six mortgage payments on their current FHA-insured loan and that 210 days pass from the most recent closing date to be eligible for an FHA Streamline Refinance.
What should you Expect
Though FHA streamline refinance in Texas is one of the easiest programs to qualify for, it also comes with closing costs. The closing cost for this program could be much lower than a conventional mortgage refinance.
The way this works is, the lender would increase the interest rate for the tenure of the loan to cover the closing costs.
FHA streamline refinancing also has some mortgage insurance premium requirements (MIP). This refinance is even FHA-insured. Hence, borrowers need to pay two types of mortgage insurance payments.
First, is an upfront payment paid at closing, and the second is an annual payment, which is split into 12 installments and paid with your monthly mortgage payments.
With respect to mortgage insurance premiums, homeowners using the FHA Streamline Refinance program are divided into two classes.
First, homeowners whose new loan replaces an FHA-backed mortgage endorsed before June 1, 2009, and Second, homeowners whose new loan replaces an FHA-backed mortgage approved on/after June 1, 2009.
The borrowers with old FHA mortgages have a different MIP structure compared to the latest FHA borrowers.
Conclusion
If you have an FHA-insured mortgage, which was taken before June 1, 2009, refinancing to get a lower interest rate through FHA streamline refinance in Texas would be making complete sense and save you a lot of money.
If your current FHA mortgage was taken after June 1, 2009, you can still go ahead and talk to different lenders for this option.
As the interest rates are still in their lows, you might as well get this opportunity to get the most out of it. It is worth trying as this program comes with some excellent benefits for the borrowers.
