15-Year FHA Streamline Refinance Rates Offer More Money for Your Refinancing Dollar
Published March 11, 2022
Today's 15-year FHA streamline refinance rates offer borrowers more options than ever before. For example, lower mortgage insurance premiums mean more mortgage insurance premium (MIP) refunds. In addition, there's no credit check, no income verification, and even appraisals are unnecessary.
What are 15-year FHA streamline refinance rates?
Fifteen-year FHA streamline refinance loans are created by refinancing an existing FHA-insured mortgage. The streamline refinance process involves minimal fuss compared to traditional 15-year, and 30-year refinance options. However, those loans require complete credit documentation, a decent credit score, income verification, and an appraisal.
15-year FHA streamline refinance loans differ from traditional refinances
When you refinance a mortgage, you create a whole new financial instrument. However, mortgage refinancing can be profitable if current interest rates are lower than the interest rate you're currently paying on a traditional mortgage. For example, locking in a lower fixed interest rate via a 15-year or a 30-year mortgage refinance will save you money on your mortgage payment every month for the life of the loan.
Interest rates are currently low. This means borrowers can benefit by locking in the lowest possible interest rate while it's available – most frequently through a traditional 30- or 15-year refinance.
By contrast, FHA streamline refinance loans are only available for homeowners whose original mortgage loans were FHA loans. The 15-year FHA streamline refinance rates do not require a credit check, an appraisal, or income verification. These loans are available as either credit-qualifying or non-credit-qualifying instruments.
Who qualifies for an FHA streamline refinance?
Streamline refinance loans reduce the amount of documentation and underwriting required from the lender. However, they do not reduce or eliminate the costs incurred in the transaction. Still, there are basic requirements that borrowers must satisfy in order to qualify:
The mortgage to be refinanced must be FHA-insured and in good standing.
Cash at closing cannot exceed $500.
The 15-year FHA streamline refinance loan must yield a net tangible benefit for the borrower.
The net tangible benefit will vary according to the type of loan being refinanced, the existing loan's interest rate, and the terms of the new loan.
What are the different types of 15-year FHA streamline refinance loans?
There are different ways that lenders may offer 15-year FHA streamline refinance loans. There are no-cost refinances, for example, that eliminate all out-of-pocket expenses for borrowers. Instead, the lender pays for any closing costs incurred in the transaction. This is accomplished by way of higher interest rates on the new loan than if the borrower had financed or paid the closing costs in cash.
Two types of 15-year FHA streamline refinance loans are available for borrowers. Both types of loans have their benefits and disadvantages. They are: credit-qualifying 15-year FHA streamline refinance loans and non-credit-qualifying FHA streamline refinance loans.
Credit-qualifying 15-year FHA streamline refinance loans
Credit-qualifying loans require a credit check, income verification, and a debt-to-income ratio. This information is then used to lock in the lowest possible interest rate on your new loan.
These loans require a bit more work, but they can save you a lot on interest if you have good credit. Credit-qualifying loans can also reduce your interest rates if your financial position has improved since you obtained the original FHA loan.
In some cases, a credit-qualifying 15-year FHA streamline refinance will be your only option:
A refinance will increase your monthly mortgage payment by more than 20 percent.
You intend to add or remove a borrower.
You assumed the original mortgage from a seller less than six months ago.
The mortgage you assumed contained no restrictions regarding your creditworthiness.
The mortgage you assumed did not elicit a due-on-sale clause.
Non-credit-qualifying FHA streamline refinance loans
The FHA does not require lenders to check your credit or verify your income in non-credit-qualifying FHA refinance loans. Therefore, even if your credit is fair or poor, you can still qualify for 15-year FHA streamline refinance rates with non-credit-qualifying FHA loans. The process will be easier and faster, too.
What are the principal benefits of an FHA streamline refinance loan?
Avoid a credit check. A low credit score can't stop you from using the FHA streamline loan's non-credit qualifying option. This is almost unheard of with other refinance loans.
Lock in a new and lower interest rate. In the mortgage industry, current 15-year FHA streamline refinance rates are considered to be remarkably low.
Reduce your mortgage insurance premiums (MIPs) by accessing today's lower yearly mortgage insurance premiums.
Get a MIP refund of up to 68 percent of your prepaid mortgage insurance by way of a MIP discount on the new refinanced loan.
Bypass the income verification process and employment checks. You can get FHA streamline refinancing even if you just experienced job turnover or took a hefty cut in income.
No property appraisal is required. You can use 15-year FHA streamline refinance rates regardless of the current condition of your home.
A streamline refinance loan closes faster than other loans, and the closing costs are less.
What makes FHA loans and FHA streamline loans different than other loans?
FHA loans require a minimum down payment of 2.5 percent. The credit qualifications are more relaxed, and the closing costs are reduced.
Streamline refinance loans were explicitly designed to give homeowners with FHA loans an opportunity to quickly cash in on the current low-interest rates without dealing with an avalanche of paperwork and lengthy processing times.
What are the potential disadvantages of an FHA streamline refinance loan?
Streamline refinance loans are only available to homeowners with existing FHA loans.
You must pay an upfront mortgage insurance premium (UFMIP) and other closing costs.
The only closing cost you can finance is the upfront mortgage insurance premium (UFMIP).
The new mortgage must be equal to or less than your current mortgage.
The maximum available cash back at closing is $500.
Fifteen-year FHA streamline refinance loans can be a lucrative real estate investment with a decent return on investment (ROI). Of course, we don't know where interest rates are headed next, but with today's 15-year FHA streamline refinance rates, you can still strike while the iron is hot.