According to the U.S. Department of Housing and Urban Development (HUD), the basic requirements for a streamlined refinance are as follows:
Streamline refinances can be offered in several ways. For example, lenders may offer “no-cost” refinances, where borrowers pay no out-of-pocket expenses. Instead, the lender might charge a higher interest rate on the new loan if the borrower opts not to pay the closing costs in cash.
In such cases, the lender covers any closing costs incurred during the transaction. According to FHA guidelines, lenders are not allowed to include closing costs in the new mortgage amount of a streamlined refinance. Simply put, an FHA streamlined refinance allows current FHA loan borrowers to lower the interest rate on their mortgage without having to meet an extensive list of criteria.
When refinancing through the FHA Streamline program, borrowers are typically required to pay closing costs. The key difference with streamline refinancing is that it does not require homeowners to pay for an appraisal. Homeowners can expect to pay between $1,000 and $5,000 in closing costs for an FHA streamline refinance. However, this amount could be higher or lower depending on factors such as your new loan amount, down payment, and other variables.
If borrowers make a down payment of less than 20 percent of the home’s value, their lender may require them to purchase private mortgage insurance (PMI). Lenders can charge this premium upfront and include it in the new loan estimate. It’s important to note that PMI only protects the lender in case the borrower stops making payments.
If you are interested in refinancing your current FHA loan or have any questions, please reach out using the contact information below.
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