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Luxury house with verandah and beauty gardenIt’s now easier to do some FHA streamline refinances because of a new policy around closing resulting from the Federal Housing Administration’s latest handbook release.

The new policies should make it easier for clients to bring money to the closing table and get a streamline completed more easily.

The FHA Streamline is already attractive because there’s often less documentation involved. You can also often skip the appraisal requirement associated with most loans.

Cash to Close

One of the common pitfalls people run into when they’re trying to do an FHA Streamline is that the escrow funds for taxes and insurance typically don’t transfer to the new loan at close.

As long as you don’t have a shortage in your current escrow account, you’ll get a check from your lender for whatever amount was left over in your escrow account after you closed your new loan.

If you’re switching lenders, you won’t get the money from your current escrow account until after you close on the new loan. This means that you may have to come up with funds to set up a new escrow account and bring them to close.

Prior to the change, clients had to document the funds in their account before being able to close. In a major win, clients no longer have to document the source of the funds as long as the amount needed for the closing is less than their combined principal and interest payment on the new loan. The only requirement is to actually have the money in your account.

With it no longer being necessary (for some) to show bank statements with the closing funds, one obstacle to getting to the closing table may be averted.

Why Streamline?

This streamline thing sounds alright, but why would you do it? We’ve got a couple of big reasons to do this right now.

For starters, we’re in an extremely low rate environment right now. No one knows how long this will last. The Federal Reserve has been making some noise about raising short-term interest rates soon. When that happens, your mortgage rates are likely to go up.

If you’re looking to shorten your term, you might as well do it while rates are low.

The second great reason is that you can potentially lower your mortgage insurance premium. The Obama administration lowered premium levels this past January. Depending on your current mortgage insurance rate, you may be able to get a better deal by streamlining now.

So that’s the deal. It’s getting easier to do an FHA Streamline. Have any questions? Let us know in the comments section. To get the process started, apply here.

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