What Are The Pros And Cons Of The FHA Streamline Program
FHA Streamline Program Pros and Cons
The FHA streamline program aims to spare homeowners from the headache of refinancing their mortgage. Unlike a regular refinance process, FHA streamline refinancing doesn't require as many documentation, and the underwriting process doesn't take up as much time. Moreover, home appraisals, credit scores and employment or income evaluation aren't necessarily taken into consideration. In other words, it provides a shortcut to refinancing. But the FHA streamline program isn't exactly problem-proof.
List of Pros and Cons of the FHA Streamline Program
List of Pros of the FHA Streamline Program
1. Easy to qualify
Don't have a stellar credit score? That is not a problem with FHA financing, what with credit check …show more content…
This is why an accurate appraisal is necessary, because a higher valuation could mean better refinancing products to choose from.
3. Higher upfront payment for mortgage insurance
An upfront payment for mortgage insurance is a requirement when you take out a new FHA loan. This becomes a problem if your loan-to-value ratio is higher than 78%, because you must pay annual insurance premiums on your mortgage. It is even higher on your new loan if you took out the original loan after June 1, 2009. Your loan balance and monthly payment would also increase due to the mortgage insurance.
4. Problems with the closing costs
In a traditional mortgage you may be allowed to wrap closing costs into your loan balance, but this is not the case with an FHA streamline refinance. This is because you have to pay your closing costs upfront or find a lender that offers zero cost refinance, which isn’t exactly zero. Although you don't have to pay closing costs with “zero cost”, the amount is actually spread out over the life of your loan through a slightly higher interest rate. Suffice to say that there's no getting away from the closing cost, lender-paid or
The FHA streamline program aims to spare homeowners from the headache of refinancing their mortgage. Unlike a regular refinance process, FHA streamline refinancing doesn't require as many documentation, and the underwriting process doesn't take up as much time. Moreover, home appraisals, credit scores and employment or income evaluation aren't necessarily taken into consideration. In other words, it provides a shortcut to refinancing. But the FHA streamline program isn't exactly problem-proof.
List of Pros and Cons of the FHA Streamline Program
List of Pros of the FHA Streamline Program
1. Easy to qualify
Don't have a stellar credit score? That is not a problem with FHA financing, what with credit check …show more content…
This is why an accurate appraisal is necessary, because a higher valuation could mean better refinancing products to choose from.
3. Higher upfront payment for mortgage insurance
An upfront payment for mortgage insurance is a requirement when you take out a new FHA loan. This becomes a problem if your loan-to-value ratio is higher than 78%, because you must pay annual insurance premiums on your mortgage. It is even higher on your new loan if you took out the original loan after June 1, 2009. Your loan balance and monthly payment would also increase due to the mortgage insurance.
4. Problems with the closing costs
In a traditional mortgage you may be allowed to wrap closing costs into your loan balance, but this is not the case with an FHA streamline refinance. This is because you have to pay your closing costs upfront or find a lender that offers zero cost refinance, which isn’t exactly zero. Although you don't have to pay closing costs with “zero cost”, the amount is actually spread out over the life of your loan through a slightly higher interest rate. Suffice to say that there's no getting away from the closing cost, lender-paid or