If you have an FHA loan now, you may have the option to use the streamline refinance program. With this program, you can refinance your current loan without verifying your credit score, income, assets, or home value. You can refinance with proof that you made your mortgage payments on time and that you benefit from the refinance.
It sounds great – but how do you find the right FHA lender? Do you have to use your current lender?
You are free to use any FHA approved lender you want to use. This may mean your current lender or it may mean that you find another lender to use. Just what should you look for in an FHA streamline refinance lender? Keep reading to find out.
Get Quotes From Different Lenders
One factor that the ‘best FHA lender’ will have is the best interest rates, terms, and closing costs. Chances are that you want to refinance in order to save money. If you can’t get the lowest interest rate or you pay high closing fees, it may defeat the purpose.
This is why we recommend that you shop around with three to give lenders to determine which lender has the best offerings. You want the lender that offers the perfect balance between the best rate, lowest closing costs, and the best customer service.
Find Out the Lender’s Experience With FHA Loans
There are thousands of FHA approved lenders, but they don’t all have the same experience. Some only write FHA loans here and there, while other lenders use FHA loans as their bread and butter. You want to make sure you choose a lender that has plenty of experience. This way you know that your FHA streamline refinance process will go smoothly – or at least you hope it will.
If you choose the lender that has never done an FHA streamline refinance or one with little experience in it, you may experience more bumps in the road than you would prefer. The point of the streamline process is for it to be easy and fast so that you can save money.
Are There Lender Overlays?
One thing about the government-backed loans, FHA loans included, is that the lender can add their own requirements on top of what the FHA requires. They are called lender overlays. First, FHA lenders must abide by the FHA’s minimum rules. In this case, it means that you must have a timely mortgage payment history (no more than one 30-day late payment in the last 12 months); and you must benefit from the refinance in some way.
That’s all that the FHA requires. Now, FHA lenders can add their own requirements to this. They may require to pull your credit, verify your income, or get a value for your home. You should know what your FHA lender will require before you move forward with the loan.
For example, what if you end up with a lender that wants to verify your income rather than using the income stated on your original FHA application? If you changed jobs or you make less money than you did back then for some reason, you may not get the approval you anticipated. This is why you have to shop around and ask lenders what overlays they require.
What’s the Turnaround Time?
Finally, you’ll want to ask an FHA streamline lender about their turnaround times. Are they running behind because of the number of applications they have? Do they turn loans around in a timeframe that works for you?
The turnaround time may or may not cause you to search for another lender, but it’s good to know. If you think you’ll close in the next 30 days and work out your finances so that you don’t have to make a mortgage payment next month, only to find out the lender takes 45 days to close loans, you may be disappointed. You’ll want to choose the FHA lender that has the turnaround time that meets your requirements too.
Finding the right FHA lender for your streamline refinance is a timely process. Take your time and find the lender that offers everything that you need. There are literally thousands of FHA approved lenders out there so if you don’t find what you are looking for right away, consider shopping around a little more until you find one that suits your needs the most.