Jul
10
How different are regular Refinancing and Streamline Refinancing?
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I purchased my home in Southern California in July of 2008 with FHA loan. At present I have a rate of 6.5%. I keep receiving letters saying that because the rates have dropped into the 5% range I can reduce it by refinancing. Some letters say refinance and others – streamline refinance with no closing costs. Can someone please explain the difference between those two and the costs associated with refinancing? Any help or advice is greatly appreciated!
Thanks you for your help
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6 Comments
July 13th, 2009 at 4:00 pm
since you mortgage is relatively new and you have very little equity in it, you should call a mortgage lender and find out.
July 15th, 2009 at 9:33 am
Streamline refinance is the refinance with limited documentation required. No appraisal needed so you save there. And because you don’t need income and asset proof – it saves you time. You still pay for the title and escrow fees plus establish new impound account while previous impound account balance will be refunded to you usually within 30 days.
July 16th, 2009 at 6:14 pm
A streamline refi is for FHA/VA loans. I’m not aware that they have them for conventional loans, but you might ask your lender.
A real streamline loan doesn’t require an appraisal or income information and the fee’s are are cheaper but you must be current on your mortgage and you couldn’t be late on any of your payments over the last 12 months.
Every loan has closing costs, that how lenders make their money. The so-called no cost loans just charge you a higher interest rate to make up the difference in their fees.
July 17th, 2009 at 6:12 pm
Glenn has it correct. There are cost involved in every loan. FHA allows you to streamline with just 12 months current on mortgage payments alone. What we do is pull a credit file and if current for 12 then we get an mortgage only report and we do not prove income or assets or any other debts in the file. Now since you have owned for such a short period of time and probably have little or no equity in the home an appraisal will be required for value but they can go up to 97.7% loan on the purchase price with you bringing additional cash to close. It may be 1 payment or more. Most conforming lenders do not streamline only government backed notes FHA & VA will do it for sure
I am a mortgage banker in TN & KY
July 20th, 2009 at 1:16 am
A streamline essentially requires less documentation. There are various forms of streamlines. As mentioned, FHA/VA streamlines are very popular, and pretty simple to do.
Some companies will also offer streamline products to current customers. Wells Fargo for example has a Wells to Wells Streamline. If you have a Wells Fargo loan that is Freddie Mac serviced, you qualify for a loan with no income or asset documentation, along with reduced underwriting and processing fees.
If you’ve got an FHA/VA loan, a streamline would be a nice option for you. If you’ve got a different kind of loan, it’s best to check with your current lender to see if they’ve got any programs for you.
I always tell my clients to get 3 quotes on similar loan programs from a mortgage broker, a bank or credit union, and their current lender. Each mortgage professional will have their own niches, and you’ll always get the best deal possible.
July 21st, 2009 at 12:35 pm
Streamline means the process is “streamlined”. It is made painless. There is no paperwork and no qualifying involved. If you qualify at 6%, you obviously qualify at 5%. No reason to check you out again.
A regular refinance means that you fill out the same paperwork as any person who wants a loan. You wait 30 days and then you are approved. The “regular” refinance costs $3,500. The streamline may be free.
Ignore the letters from strangers offering you loans. Borrow from banks or people you know and trust. Check out the references of any lender; the last 3 people who got loans from them..