Have an FHA mortgage? Here’s the fastest way to refinance

If you have a mortgage insured by the Federal Housing Administration and are thinking about a refinance, there’s a great product for you. It’s called a streamline refinance, and as the name implies, it’s the quickest, simplest way to take advantage of today’s low interest rates.

The reason it’s fast is that there’s very minimal documentation needed to qualify for the refinance. Don’t worry about your home’s appraisal, because a streamline refinance doesn’t require one. The FHA uses your home’s original purchase price as its value. Also, the streamline refinance doesn’t require any income, credit score or employment verification.

However, there are a few qualifications you must meet in order to use a streamline refinance on your FHA mortgage:

• You must be current on your existing mortgage, with on-time payments for at least the previous three months.
• At least 210 days must have passed since the origination of your existing mortgage loan, and you must have made at least six mortgage payments.
• The refinance must result in a tangible benefit to you. A “tangible benefit” can mean several things, but it’s usually defined as a reduced monthly payment; however, moving from an adjustable-rate mortgage to a fixed-rate loan can also qualify.
• Cash in excess of $500 may not be taken out on streamline refinances.

The FHA does not allow lenders to roll closing costs into streamline refinances. Usually, you’ll either have to cover those costs yourself, or the lender will charge a higher interest rate on the refinanced loan than if you paid the closing costs in cash. The lender will then use these extra funds to cover the closing costs.

If you have an FHA loan and want to lower your interest rate, talk to your lender about the streamline refinance. It’s a fast, easy way to refinance with minimal requirements.