Applying for an FHA Streamline loan is faster and easier than other refinancing products, but there are some dos and don'ts to consider. You won't be required to show your tax returns or other proof of actual income, and there's no face-to-face meeting required with the lender.
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Dos and Don'ts for FHA Streamline Loans
Applying for an FHA Streamline loan is faster and easier than other refinancing products, but there are some dos and don'ts to consider. You won't be required to show your tax returns or other proof of actual income, and there's no face-to-face meeting required with the lender. The ease of this process makes some borrowers think it's not necessary to do some of the same things that were done to get the original loan. Don't make the same mistake-follow this list of do's and don'ts to be fully prepared for your FHA Streamline refinance loan.
DON'T wait until you are near the time your FHA loan introductory rate expires if you have an adjustable rate mortgage. If you still have an adjustable rate or variable rate FHA insured mortgage, start exploring your FHS Streamline options as soon as you are eligible to do so.
DO examine your FHA Streamline options if you feel your current interest rate or monthly payments could be lower.
DON'T let your payments lapse on your current FHA insured home loan. Stay current. Otherwise you don't qualify for an FHA Streamline loan application.
DON'T decide to take out an FHA Streamline refinancing loan without deciding in advance about how you'll pay the closing costs. If you want to pay them up front, start setting aside money as soon as you know you want to apply for the FHA Streamline loan.
DO decide what kind of FHA Streamline loan you want-one where the closing costs are built into the loan or one where the lender charges a higher interest rate to cover the closing costs.
DON'T automatically take the "no appraisal" version of an FHA Streamline loan. FHA Streamline loans offer you the opportunity to refinance without a new appraisal. This option may be fine for those who haven't owned their homes for long, or for those who know the value of their home has declined due to market conditions or other factors. But for those who not only want to lower their current payments but also don't want to pay closing costs out-of-pocket when the deal is closed, a "with appraisal" FHA Streamline loan is the product to choose if you want to build the closing costs into the amount of your FHA-insured refinancing loan.
DO the math with your lender to determine how much money you will save on your FHA Streamline loan.
DON'T assume that lower monthly payments equals more money saved on the loan. How much do you pay over the entire course of the loan? You should know both how much per month you will save and how much you will pay over the lifetime of the entire loan.
DO ask your lender about FHA Streamline options including the FHA Streamline 203(k) program which allows you to refinance for home repairs or improvements.
DO ask your lender about the terms of the FHA Streamline refinancing program. Do you know how subordinate liens are affected by the refinancing program? How does mortgage insurance affect the final amount of your loan? Have you read the fine print on the FHA Streamline loan paperwork? Always get answers to your questions before agreeing to any new loan product.
FHA Streamline loans can help you into a lower interest rate and lower monthly payments. If you are eligible to apply, don't hesitate to take advantage of this program. Do the math, calculate your closing costs and how much you could save every month and let the FHA help you into a more affordable mortgage.
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