Today I wanted to go over several very common questions regarding the San Diego FHA Streamline Refinance mortgage loan

Keep reading to see if yours gets answered. 

If not, my contact details are below and reach out and I can add it to this list. 

Here's a quick rundown of our list:

San Diego FHA Streamline Refinance Q and A's (2019 | 2020 Update)

Q: Can I get an FHA refinance without an FHA loan?

This is one of the main requirements of the refinance process.

Your loan has to be an FHA-insured loan in order to even qualify for an FHA streamline refinance.

This isn’t the only thing that you need in order to get your loan refinanced, but it is the most important if you are wanting to go specifically through the FHA streamline refinancing process.

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Q: Why would I refinance my loan?

There are many reasons why anyone refinances their loan.

The most common reason is that they want to hopefully secure a loan with a lower interest rate or a shorter term.

Either one of these possibilities would allow someone to have more money in their pocket for spending on other large things, such as sending a kid to college or purchasing a new car.

Some other typical reasons that someone would refinance a loan do not apply to FHA-insured loans because you cannot do such actions.

You cannot get out of mortgage insurance payments by refinancing with an FHA loan.

The only way to get out of mortgage insurance payments to wait out the time period and have the proper LTV (loan to value) ratio.

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San Diego FHA Streamline Refinance Q and A's (2019 | 2020 Update)

Q: What does a streamline refinance really mean for me?

The term streamline refinance is used by many people, but the basic meaning remains the same.

A streamline refinance requires less paperwork and less work in general to do.

This does not mean that there are no costs to such a transaction, but that you spend less time trying to get everything just right.

In the FHA loan instance, you do not need an appraisal, a credit check, or employment verification in order to refinance your loan.

A conventional loan will have different standards depending on the lender.

However, the FHA streamline refinance is one of the quickest ones out there.

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Q: How often I can refinance my loan?

There is a mandatory wait period between refinances.

This period is 210 days.

This date starts from the closing of the previous refinance.

The date restriction is just a way of ensuring that you pay six payments before you try to refinance again.

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San Diego FHA Streamline Refinance Q and A's (2019 | 2020 Update)

Q: What do I need for the streamline refinance?

There are very few things you need in order to get an FHA streamline refinance.

You need an FHA loan in the first place, but then the only things you need after that is a three-month history of payment and a reason to refinance.

Both of these ensure that you’re not refinancing just for the sake of refinancing.

When you go in to refinance, then you will look at the rates and the insurance that you would pay to ensure that there is an actual benefit.

The three-month history of payment is to ensure that you’re not trying to refinance a delinquent account.

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Q: Can I refinance a delinquent loan?

No.

This is precluded by the necessity of a three-month history of payment that is current.

Delinquent loans are ineligible for this refinancing since you have shown that you won’t pay the FHA back for the loan.

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Q: What happens with my mortgage insurance premium?

Your mortgage insurance premium will still be part of your loan; however, the rate that you are charged will likely decrease when you refinance.

With a conventional loan, you might be able to get out of mortgage insurance payments entirely when refinancing, but that is impossible with the FHA.

The FHA requires not only an annual mortgage insurance but an upfront mortgage insurance that is calculated at closing.

If someone is unable to pay the entirety of the upfront mortgage insurance, then the amount is rolled in the monthly payments for the loan.

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San Diego FHA Streamline Refinance Q and A's (2019 | 2020 Update)

Q: What if I refinance within a year or two of creating the loan?  Will I still have to pay an upfront mortgage insurance premium?

Actually, no.

When you refinance your loan within three years, you will get a refund for the upfront insurance premium that you paid before.

However, after three years, the amount included in the refunds gets smaller.

This can be a reason to refinance sooner rather than later when you have an FHA loan.

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Q: Why do I have to pay an insurance premium?

Because these loans are covered by a government organization, they have to doubly ensure that they are going to get paid back.

Having two forms of insurance (the annual and the upfront) makes sure that regardless of what happens, the FHA will still get paid for the loans that they have out.

This insurance is put into place and so prevalent because of the fact that an FHA loan covers people that are not always deemed acceptable for loans elsewhere.

Because of the associated risk, the FHA needs safety measures in place.

Q: When do I stop paying my mortgage insurance premium?

With an FHA loan, it doesn’t matter if you’re refinancing or not.

The mortgage insurance premium is in effect for either the entirety of the mortgage or for 11 years.

In order to stop paying the mortgage insurance premium after 11 years, you need to have an LTV ratio of less than 90%.

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San Diego FHA Streamline Refinance Q and A's (2019 | 2020 Update)

Q: Can I use the loan balance to cover my closing costs?

No. 

That is not allowed with the way that the FHA loan is structured.

If you want to get a zero-cost refinance, then you will want to look into refinancing your loan into a conventional loan.

Q: Why would it be helpful to not have an appraisal?

Even if the mortgage that you have is worth more than the value of your house, you will be able to refinance your home with a streamline refinance.

This can mean that you will be able to keep a good LTV ratio without worrying about anything else changing.

What do you think?

Leave a comment below - or, call/text me at (760) 297-4539

Your FHA Questions Insider, 

Scott

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