Understanding Refinancing:

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Streamline & No-Cost Refinancing

A typical first time home buyer would be well served by selecting an FHA loan product. The rate and features inherent with the FHA has a number of protection measures that make it unique and very comfortable for the new buyer. When discussing a refinance, the FHA streamline, coupled with the no-cost feature, is a very competitive reason to select an FHA loan to purchase your first home.

It is the goal of FHA to have all those with an insured loan from FHA to have the lowest interest rate available. With the help of the mortgage lenders, the term streamline refers to the amount of processing necessary, and no cost refers to the cost or lack of cost the buyer is responsible for. This unique, little or no processing-mortgage rating, attempts to enable rates and term refinances to be more accessible to the FHA borrower.

The streamline process refers to the reduced amount of documentation necessary. Usually the only item required to verify credit is a mortgage rating. The theory here is if you are paying your payment at a higher rate you will be able to make it easier at a lower rate and reduced monthly payment.

In the example of no-cost refinance, closing costs are still incurred and need to be paid. In this case the lender will pay the costs. In order for the lender to pay these fees the rate will be .5% to 1.0% higher than if the borrower adds these costs to their loan. This still is the best manner to handle a rate and term refinance.

What is Refinancing| Is Refinancing Right For You? | The Process |
Streamline & No-Cost Refinancing >