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Best FHA Streamline Refinance Lenders | January 2023

If you have an FHA mortgage, you owe it to yourself to check whether you can save money with an FHA Streamline Refinance. Here is SuperMoney's list of the best FHA Streamline Refinance lenders.

The FHA Streamline refinance helps homeowners with an FHA loan lower their interest rate and reduce their monthly payments. Find out how much you can save on your FHA loan.

What is an FHA Streamline refinance?

The FHA Streamline Refinance is a special mortgage product offered by the Federal Housing Administration (FHA) that allows homeowners with an existing FHA mortgage to refinance into a new FHA mortgage with better terms and rates. The program helps borrowers who are current on their mortgage, have a good payment history, and meet other requirements to refinance their home without going through the entire loan approval process.

How much does an FHA Streamline refinance cost?

The term "Streamline refinance" refers to the amount of documentation and underwriting involved. It doesn't mean there isn't a cost attached. The cost of an FHA Streamline refinance varies by lender, but FHA closing costs typically range between 2% and 4% of the loan amount.

Some lenders offer "no cost" refinances. These loans don't come with an out-of-pocket-cost, but lenders do charge higher interest rates than if the borrower financed or paid the closing costs in cash.

What are the requirements for an FHA Streamline refinance?

Requirements vary depending on the lender you use. Remember that the FHA doesn't lend the money directly. Instead, it insures the mortgages so that lenders can be more flexible with their loan requirements and provide better rates and terms.

However, the basic requirements for an FHA Streamline refinance are:

  • First, the mortgage must already be FHA insured.
  • The mortgage must be current (not delinquent).
  • The refinance results in a net tangible benefit to the borrower.
  • Cash in excess of $500 may not be taken out on mortgages refinanced using the streamline refinance process.
  • An FHA Streamline refinance cannot be used for investment properties unless the borrower is a HUD-approved Nonprofit Borrower, a state and local government agency, or an Instrumentality of Government.

Pros and cons of an FHA Streamline refinance

The FHA Streamline refinance is an excellent program for homeowners looking to refinance their mortgage and reduce their monthly payments. However, there are also some drawbacks to consider.

WEIGH THE RISKS AND BENEFITS

Here is a list of the benefits and the drawbacks to consider.

Pros
  • There is no need for proof of employment or income since you already qualified for an FHA mortgage.
  • You can avoid the home appraisal also since the FHA will use your original purchase price to calculate its value.
  • The process is faster and easier than most other refinance programs.
  • Qualify for the same rates as regular FHA mortgages.
  • No prepayment penalties.
  • You can qualify even if you have little or no home equity.
Cons
  • You can't use an FHA Streamline refinance as a cash-out mortgage refinance.
  • Closing costs cannot be rolled into the mortgage amount. However, you can choose a "no-cost" mortgage where the closing costs are paid by accepting a higher interest rate.
  • You have to pay a mortgage insurance premium.
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