Many veterans across America find themselves unable to qualify for VA loans and therefore choose to go with a FHA home loan instead. When it comes time refinance these loans, whether it is several years from the original loan endorsement or the minimum six months of occupancy, we see homeowners looking to save as much money as possible. To help these homeowners receive the best options available, the FHA (Federal Housing Administration) created the Price-Cut FHA Streamline Refinance program.
Price-Cut FHA Streamline Refinances
In June of last year, The FHA released a new streamline refinancing program which featured lower insurance rates which may save homeowners money on monthly mortgage costs. This program is affectionately called a Price-Cut FHA streamline refinance and was created to offer homeowners the best options available with assistance in cutting refinancing costs as well as acquiring lower interest rates. This is accomplished through reducing the rate of mortgage insurances including those of upfront mortgage and annual mortgage insurance premiums. The rates of the upfront premiums were reduced to .01% while the annual mortgage insurance premiums were reduced to .55%. These seemingly small adjustments can save borrowers thousands of dollars in upfront costs when refinancing a home loan, which leads one to ask about the requirements to refinance with the new Price-Cut FHA Streamline refinancing program?
Price-Cut FHA Streamline Refinancing Requirements
To qualify for the new streamline refinancing program available with the FHA, borrowers must have a current and paid to date FHA mortgage loan. This means that all mortgage payments have been made on time and the loan has been paid monthly up to the point of refinance. Other requirements to qualify include the loan’s paperwork indicating that it was endorsed before the FHA Price-Cut cutoff date of May 31st, 2009 and that the borrower meets the traditional streamline loan and lender requirements.
Traditional FHA streamline refinancing requirements are different than a VA streamline refinance and typically include regulations stating that:
- The property to be refinanced must have been occupied by the loan holder/homeowner for a minimum of six months prior to the refinancing streamline request.
- The home must be the principal residence of the homeowner looking to refinance.
- The refinance request cannot exceed the price of the current loan to be refinanced. If homeowners are looking to refinance with as a cash-out option, we suggest looking into a Cash-Out Refinance.
- The purpose of the refinance must be to receive lower interest rates as well as a desire for lower monthly mortgage payments.
- An FHA approved lender must be used to assist in the FHA streamline refinancing process.
- All closing costs are required to be paid up front.
How a Price-Cut FHA Streamline Refinance Can Save Homeowners Money
As we mentioned above, in a price-cut FHA streamline refinance, the insurance premiums are reduced to .01% and .55%. For those who are unable to meet the criteria of qualification for the new streamline refinancing program, a conventional FHA streamline program is available. The conventional streamline option requires a homeowner to refinance with the annual mortgage insurance rates and upfront mortgage insurance rates that are in the current market. For example, the upfront mortgage insurance premiums recently jumped up from 1% to 1.75%, if a homeowner were to use a conventional streamlined refinance, they would need to pay the rate of 1.75%. That can be a significant difference in insurance rates compared to a refinance with the price-cut program. Many refinancers look to use the FHA’s new program to avoid rate increases and save money in upfront costs and long term insurance rates.
The Streamline Refinance Programs
The FHA’s streamline refinance programs offer homeowners several unique benefits and with the new price-cut option, American refinancers can receive the lowest insurance premiums possible, saving money and time.