Refinancing a mortgage means getting the original one paid off and drawing up a new one. The purpose of this is to lower the monthly payment.
Pittsfield, MA -- (SBWIRE) -- 03/19/2013 -- Real-estate-yogi.com has looked into FHA streamline mortgage refinance and would like to share what it learned, such as:
- Simplest Way to Refinance
- No Verification Necessary
- Reason for Refinance
- Minimum Qualifications
FHA Mortgage Refinance 101
An FHA (Federal Housing Administration) streamline refinance mortgage is the easiest, quickest way for a mortgage to be refinanced. This is a special mortgage loan product, designed just for those who have a current FHA mortgage. If the mortgage is held by Fannie Mae or Freddie Mac, this product will not be offered. The “perk” of this refinance is that it does not require a home appraisal, unlike other similar products. The FHA allows their borrowers to use the original purchase price of their home for the refinance, regardless of what the home’s value is today.
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Verification Not Required
Uncharacteristically for a lender, the FHA streamline refinance does not need verification of income, employment, or credit score. No matter what an individual’s situation, if his original mortgage is with FHA, he can qualify for refinance. That seems a bit odd, but it works for the FHA, as their job is to “insure” mortgages, not create them. The more folks they help obtain mortgages, the better it is for the FHA. It also helps to keep FHA mortgage streamline refinance rates low.
Purpose for Refinance
In order to receive those low streamline refinance rates for FHA mortgage, one has to prove that there’s a “Net Tangible Benefit” for the refinance. An NTB is a legitimate reason for refinancing. NTB can be a reduction of the mortgage payment by 5% or more. Another NTB might be to switch from a fixed to an adjustable rate for the duration of the loan. Whatever reason a person has for wanting to redraw his mortgage, as long as it meets NTB standards, it fine.
Minimum FHA Refinance Requirements
Despite parting from the traditional path of qualifications for a refinance, the FHA refinance guidelines do request some conformity to the rules. If one wishes to obtain an FHA streamline mortgage refinance, he must have a perfect, 3-month long payment history. No late payments are allowed. One late mortgage payment in a year is okay. Loans must be up-to-date at the time of the refinance.
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