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By: Mutual of Omaha Mortgage

Streamline Refinance FAQ

Here are some frequently asked questions about streamline refinance mortgage loan products.

What is Streamline Refinance?

A streamline refinance is a term used to describe a refinance mortgage loan in which a borrower is able to provide limited income and credit documentation to meet lenders processing and loan underwriting requirements. A streamline refinance can be an opportunity for a qualified homeowner to alter their rate and term to be more favorable for their financial needs and goals with more efficiency than the process of a general refinance mortgage loan. The FHA streamline refinance and the VA streamline refinance are two examples of primary streamline refinance mortgage programs available to prospective borrowers. Some conventional loans also offer streamline refinance programs; however, these program requirements can vary from lender to lender. The two most dominate benefits of a streamline refinance loan are the possibility to complete the refinance loan process in a shorter amount of time while paying lower closing costs.

How Does Streamline Refinance Work?

When a homeowner is ready to refinance their current mortgage, often the process can seem just as complex and tedious as their original mortgage application. This process can be especially rigorous when a homeowner changes lenders during their refinance. The defining word in the term streamline refinance mortgage loan is “streamline”. Although a streamline refinance does not guarantee approval, for many borrowers it is an easier process overall. Streamline is used to describe a refinance loan process which is more simple compared to other refinance application processes, which typically require thorough documentation from the borrower regarding credit, income and assets. Many qualified homeowners enjoy the benefits of a streamline refinance because is often involves less hassle because of less stringent underwriting guidelines.

What Is FHA Streamline Refinance?

The FHA Streamline refinance loan is designed to help homeowners refinance their existing FHA mortgage and secure a lower interest rate more quickly by eliminating some paperwork and documentation review. A homeowner who currently has an FHA mortgage loan who is interested in an FHA streamline refinance would not need to provide employment, income, or credit verification to their lender in order to move forward with their refinance application. With the removal of documentation review such as income verification, the FHA streamline refinance loan process involves less scrutiny, and overall is often more effective and efficient for borrowers. The FHA streamline refinance loan is available to borrowers for both 15 and 30 year terms.

How To Qualify For FHA Streamline Refinance?

The FHA streamline refinance is available to homeowners who currently have an FHA-backed mortgage loan, even if they have little equity currently established in their home. There is no minimum equity requirement to be eligible for the FHA streamline refinance loan. The FHA streamline refinance loan often does not require an appraisal, which can save a homeowner time and money during the refinance process. To qualify for an FHA refinance a homeowner must have a minimum of a three month perfect repayment history on their current mortgage. In addition to a strong payment history, a homeowner must also wait 210 days from their original closing date or have made at least six mortgage payments prior to submitting a refinance mortgage application. During the review process of an FHA streamline refinance, a lender is typically required to provide proof that the borrower will lower the cost of their mortgage significantly as a result of the refinance. This process is considered the confirmation of tangible benefit to the borrower which is a condition of FHA guidelines.

What Is VA Streamline Refinance?

The VA streamline refinance is also referred to as VA IRRRL loan or more generally a VA refinance. All of these describe the same refinance loan option backed by the VA. IRRRL stands for interest rate refinance reduction loan. The VA streamline refinance loan is a fixed-rate refinance loan program which is often an easier and more efficient loan process because the borrowers are refinancing from one VA mortgage loan to another VA loan. This loan is often also referred to as VA-to-VA Loan because a homeowner cannot transition to an VA refinance if they do not currently have a VA-back mortgage loan.

Is Streamline Refinance A Good Idea?

In 2020, mortgage interest rates hit historic lows. Mortgage interest rates recently fell to their lowest point in a decade. For many homeowners who purchased a home from 2009 to 2019, there is an incredible savings opportunity presented with a refinance. Whether you shorten your term to reduce the amount you spend in interest over time or lower your interest rate to decrease monthly payments, many homeowners are interested to learn how a refinance might benefit them at this time.

A streamline refinance could help a homeowner interested in capitalizing on a savings opportunity, who may want to alter their mortgage term but who does not want to endure a difficult, tedious process. A streamline refinance can be a hassle-free loan application process throughout loan review and underwriting. To evaluate your options and learn more about FHA streamline refinance, VA streamline refinance and other conventional streamline refinance mortgage loans, connect with an approved mortgage lender.

How To Qualify For A VA Streamline Refinance?

A VA streamline refinance is not available to homeowners who do not currently have a VA mortgage loan. The VA streamline refinance loan does not require that the borrower currently occupies the home which is currently financed with a VA mortgage product, as long as they can prove it was once their primary home. To fully qualify for a VA streamline refinance, a homeowner who currently has a VA mortgage must have successfully made 12 consecutive months of mortgage payments on time.

How Much Does Streamline Refinance Cost?

The cost of a streamline refinance can differ depending on a borrower’s chosen streamline refinance mortgage, which could be an FHA streamline refinance, a VA streamline refinance or possibly a type of conventional loan streamline refinance option. For example, for a FHA streamline refinance depending on the total amount of the loan a borrower can pay anywhere from $1,000 to $5,000 in closing costs. For VA streamline refinance mortgage loans, the closing costs can vary from lender to lender, however no matter the closing costs in most cases the borrower is about to finance their closing costs and pay over time. If a borrower currently has a loan with Fannie Mae or Freddie Mac, a conventional streamline refinance will likely have lower closing costs than other refinance mortgage loans, but the total will differ depending on a few factors. Overall closing costs for any type of streamline refinance are often lower than other refinance mortgage loans for most borrowers.

How Long Does Streamline Refinance Take?

In an ideal situation, a borrower can expect a streamline refinance to be completed anywhere from 30 days to as little as a few weeks. The typical refinance loan process can take 45 to 60 days. With the reduction of documentation, removal of the appraisal and other less stringent underwriting guidelines, many homeowners will enjoy a more efficient process as a result of their streamline refinance loan application.