The Home Refinance RushIf you’re like many smart homeowners today, you’re thinking of refinancing to a lower rate to take advantage of some of the most attractive loan rates in decades.It’s true, rates are being kept artificially low with government incentives. And they are guaranteed to rise when the economy goes into solid recovery. So financially savvy mortgage holders are acting now to shore up their debt by cashing in on today’s low rates.The bottom line is that refinancing in today’s market is a smart move that will pay off for years to come.FHA, Refinancing, and Economic RecoveryWe all know the economy is lagging. Because our economy is so dependent on the health of the housing market, part of the government’s complex recovery plan includes fortifying home values. Naturally, the government wants homeowners to stay in their homes. For many people this requires refinancing to a lower payment.Where does FHA come in? An FHA home loan is federally insured. To a bank, that means it’s a safer asset than many other types of home loans. Because of the stability of the FHA loan, and because the government wants to make refinancing as easy as possible for citizens, certain requirements have been relaxed to encourage refinancing and to provide for quicker qualification.In the mortgage industry the new, faster process is called the FHA Streamline.Good News for FHA Loan HoldersWith an FHA Streamline refinance, homeowners are often allowed to skip the appraisal process, one of the biggest snags for homeowners trying to refinance. In some cases they may even be able to skip the income verification.And all types of current FHA loans qualify for the program. This means 30- and 15-year fixed-rate FHA loans, as well as all ARM FHA loans.Do You Have an FHA Loan?Maybe you’re not sure if you are currently in an FHA Loan. To verify, you’ll need to locate an FHA case number associated with your loan. The case number is usually a 10-digit number, but it can be as many as 13 digits.Here are some places to look for verification of your FHA loan case number:
Your mortgage statement: On your mortgage statement there should be a breakdown of escrow and your next payout estimate. Often you can find your FHA case number there.
Your loan note: Look on the upper right corner for the case number.
Your home loan appraisal: If you have a copy of your home’s last appraisal, look on the cover page. The case number should be on the upper margin of the first page of the report.
Do You Qualify for an FHA Streamline?If you’ve determined that you are currently in an FHA insured loan, you may be the perfect candidate for an FHA Streamline. But what else would you need to start rolling toward a refi?According to the Housing and Urban Development website, the basic requirements of a FHA Streamline refinance are:
The mortgage to be refinanced must already be FHA insured.
The mortgage to be refinanced should be current (not delinquent).
The refinance is to result in a lowering of the borrower’s monthly principal and interest payments.
No cash may be taken out on mortgages refinanced using the streamline refinance process.
If you think these guidelines describe your situation, it’s probably a good idea to speak to a home loan expert or mortgage broker to find out how refinancing can improve your personal finances. Considering the current interest rates, it’s likely refinancing can enhance your bottom line.A simple example is to look at the numbers on a $200k home loan. At 7% interest, that’s a monthly payment of $1,330. Refinancing to a rate of 5% would lower the monthly payment to $1,074. That’s a monthly savings of $256, and a yearly savings of $3,072. Over a 30-year loan, that’s a savings of over $92,000!The truth is, the cost of borrowing may never be lower in our lifetime. Qualifying for a refinance now could mean hundreds of dollars per month back in the pockets of homeowners. And with the FHA streamline simplifying the process for millions of qualified homeowners, it could be the most painless savings ever.