Arizona Mortgage Broker Blog

FACT - there is no one answer for everyone. There are several factors to consider when thinking about a Streamline FHA refinance of your current FHA mortgage. Below are a few helpful tips to get you started on the right track. A Streamline FHA Refinance will not be for everyone but in today's marketplace, an FHA refinance will be suitable and beneficial to most.

Do you have a 30 year fixed rate lower than 5.375%? If this is the case, you might not be one of the lucky ones who will benefit from a refinance. You are one of the lucky one's who was able to lock in a great interest rate. You may still want to consider a refinance if you plan to pay the home off or stay there another 5-10 years.

Are you planning to sell your home in the next 2-4 years? If you answer yes, then the answer will more than likely be no to a refinance, UNLESS, you are paying over a 6.5% interest for a 30 year fixed rate.

Has you mortgage insurance been cancelled on your FHA mortgage? Again, if you answer yes, a refinance may not be in your best interest, BUT, if paying higher than a 6 or 6.5% interest rate, it could be very beneficial.

Have you paid on your FHA mortgage for more than 10 years? Once again, a yes answer could mean a refinance may not be in your best interest. Rates weigh heavy in the total analysis. I would not use a definite no on this one either. I would suggest you seek advice from a very reputable and knowledgable broker. A good broker should be able to explain the cost savings or periods of time.

Those are 4 of the most common factors I can think of that might not make refinancing an FHA mortgage very helpful in the long run. There are many reasons why it will be of huge benefit for you to refinance though. I will list the most common factors I can think of.

Is your FHA interest rate over 5.375%? If you answer yes to this one, you really should consider speaking to a well versed mortgage broker. Interest rates are at 5% today with options to get in the 4.75% or even as low as 4.5%. These savings can be huge over the course of paying off your home or having more equity available to you when you decide to sell your home.

A real example is below..... 

Using a loan amount of $200,000 with an original FHA rate of 6.5%. Your principle and interest payment is $1264 a month. If you refinance into a 5% FHA loan your payments would be $1073 a month for a monthly savings of $190 a month. Sounds good, RIGHT? Listen up, here is where it get's interesting. Say you refinance into a 5% rate BUT you continue paying the same payment you are used to paying. This applies an extra $190 a month to your principle balance. I know your thinking so how is that interesting....not seeing it yet? Well, how about if I tell you paying this little bit extra every month, you will only pay on the home for 21 years. Then you own it after 259 payments instead of 360. Now if you take the savings of 101 months times your "WOULD BE MORTGAGE PAYMENT" you end up saving $127,664. Yes I typed that right and it is not a typo. You will save over $127 thousand in payments compared to keeping the 6.5% rate you currently have. Does that sound interesting to you yet? I thought so! Speak with someone who knows how to tailor the information to your specific scenario and you too will see some serious savings.

Do you owe more than the home will sell or appraise for? Then this might be for you. If you have owned the home for 3 or more months and have not been late, you can do an FHA streamline refinance. You will not need an appraisal and documentation will be minimal. You can refinance as long as you do not increase the original loan amount. You will need to come in with some or all closing costs to avoid increasing the loan amount. The savings alone can repay the closing costs in as little as 12-36 months. Then you can begin adding the savings of refinancing.

Are you on an Adjustable Rate Mortgage (ARM)? YES, this is for you! If you plan to keep the home, you must consider getting on a fixed rate mortgage to prevent you interest rate from adjusting. If you gamble with your financial freedom, you could be rolling the dice in the dark. It is not worth the few dollar savings each month to potentially be out on the street when the bank starts foreclosure from missing payments you can no longer afford. In my opinion, it just is not worth the risk.

FHA interest rates are near record lows FHA mortgages are assumable House values have dropped in AZ No appraisal is required Limited documentation is needed Savings are HUGE!

Apply online for your FHA Streamline Refinance