If you’ve been putting off mortgage refinancing because you don’t think you’ll qualify with today’s best mortgage lenders there’s good news for homeowners with FHA backed loans. The President set new guidelines cutting red tape from the FHA Streamline Refinance program making it easier to refinance your FHA mortgage. Here’s what you need to know about qualifying for the new FHA Streamline Refinance program.
What Is Streamline Mortgage Refinancing?
Streamline Refinancing is essentially an interest rate reduction program for home loans insured by the FHA. You get to take advantage of today’s low refinance rates from lenders like Amerisave or USAA Mortgage Rates without having to qualify. That means no appraisal, credit check and you don’t have to document your income.
All you need to do make all of your payments on time going back twelve months. Of course your existing home loan needs to be insured by the FHA. If you have a VA home loan there is a similar program through the Veterans Administration called Interest Rate Reduction Refinancing Loan or IRRRL.
Refinance Paying Fewer Fees
President Obama slashed the upfront fees charged for FHA mortgage refinancing. You used to have to pay an upfront fee of one percent; this fee has been slashed to .01% of your loan amount. The annual mortgage insurance premium is also being significantly reduced to .55% of the loan balance.
The Obama Administration announced that the changes would save the average homeowner $95 a month in addition to the savings available from historically low refinance rates. The only catch is that the FHA must have backed your home loan before June 1st, 2009.
This is really only good news for homeowners with FHA mortgage loans taken out before June of 2009. For everyone else the fees are going up significantly as of April 2012.
Good News for Underwater Homeowners
If you’re underwater in your current home loan or recently unemployed these changes by the Obama Administration are welcome news. You won’t be required to get an appraisal or document your income to qualify. If you’re underwater and owe more than your home is worth the FHA is encouraging you to consider shortening the term-length on your new home loan to 15 or 20 years, allowing you to build equity at an accelerated rate.
The lender still has to approve your application for streamline refinance and some homeowners may find their applications are being denied even if they meet the program requirements. Some lenders may even choose not to participate.
You can learn more about getting today’s low refinance mortgage rates without paying unnecessary fees or points by checking out my free Underground Mortgage Videos.