Do you have an FHA loan where the rate is higher than today’s market rates? Then there is good news for you! Rates are still very, very low and it’s not too late to take advantage of them. And if you happen to have an FHA loan, there is a program you need to know about.
It’s called the “FHA Streamline Refinance,” and it’s only for borrowers that already have an FHA loan. They are very fast and simple to do. You can lower your rate and your payment and it’s a pretty easy process. There is no credit check, no employment verification and not even an appraisal! On top of that, the rate that FHA charges for PMI (private mortgage insurance) went down recently. So not only could you get a lower interest rate, but lower PMI, too.
There are some qualifications, but they aren’t too cumbersome: You must be current on your existing loan, it must be at least 6 months from the date you bought the home, you can’t take cash out, and it must reduce your mortgage payment by at least 5%. There are fees associated with this process, but you can usually roll them into your loan.
One thing I like to point out whenever anyone considers a refi is the payoff period. Some people refi if it will save them anything per month, even $50. But keep in mind that if you’ve had your loan for 5 years, and then you refi, you now won’t pay it off for another 30 years. So you always have to weigh the savings NOW against having to make 5 more years of payments at the end (IF you are planning to keep the loan and home for 30 years, which very few people do nowadays!).