Under a normal mortgage, you can obtain a refinance for your loan if you’ve done well in your payments thus far. A refinance allows you to reexamine the terms of your loan and secure a lower, more affordable interest payment for the remainder of your mortgage. It can be a lifesaver when you are (a) affected by an income loss, (b) retiring, or (c) looking to invest in something else.
The FHA streamline refinance is the refinance option available for those already insured by an FHA loan.
The FHA Streamline Refinance
The standout benefit of an FHA streamline refinance is that you won’t need the return visit of a home appraiser. Instead, you’re allowed to continue using the original purchase price as the value of your home, regardless of what the current market looks like.
That’s not the only benefit of seeking out an FHA streamline refinance. You do not need employment or income verification to refinance, allowing those who have hit hard times and are looking to cut down on payments to find financial relief.
On top of that, the FHA does not need to see your credit score again. They figure that if you qualified for the mortgage before, you should still be trusted to finish your commitment.
What better prospects could you ask for than these? Too many homeowners have been denied the opportunity to refinance a normal loan because of hard times or inopportune moments. The FHA has always been in the business of making home purchases possible and final.
In the early years of the twentieth century, getting a home loan was handled by insurance companies. Back then, mortgages were expected to be paid back over three to five years, ending with a final hurrah payment to finish out the debt at the end of the term. Not to mention there was a ridiculously high down payment required for the property (sometimes reaching as high as 80% of the property value). Some believe the terms were set so the insurance companies could repossess the property, not help a family get into a new home.
The Federal Housing Administration came about shortly thereafter to fix this problem with the FHA insured loans. Using the government’s good name to back up its citizens, American’s were able to obtain an affordable mortgage to be paid back over a workable time frame for a reasonable percentage. For the first time, home ownership was possible for citizens everywhere.
The government stepped in for the good of its citizens, not to obtain property advantages. Now their efforts are geared to making the purchase of a home final for their citizens—meaning that they would do all they could to give the citizen a fighting chance to pay off his or her loan.
The FHA streamline refinance efforts help citizens to adjust their monthly payments so they can one day own their own home. The FHA is setting its people up for success, not failure. They want to make the process as smooth as possible, while making it available to everyone that wants to be a homeowner.