VA & FHA Refinancing Vs. Streamline Refinance
By: Jennifer Guidry
With now being a great time to refinance your mortgage loan, I’m sure you have heard all kinds of buzz words about the different kinds of refinancing available to you. What does it all mean? This blog is to help you understand the difference from a VA or FHA refinance as compared to a Streamline Refinance.
Refinance vs. Streamline Refinance Programs
Available through the FHA and the VA
There are many options available to you if you are looking to refinance your mortgage loan. Here, the focus lies on two different types of loan programs. They include the FHA Refinance vs. the FHA Streamline Refinance. From there the focus will shift to the VA Refinance vs. the VA Streamline Refinance. Obviously you have many government backed programs to choose from for your refinance needs.
FHA Loans
First, you must understand FHA is and what they do. FHA stands for the Federal Housing Administration. They are a government entity that provides insurance to lenders in case a borrower defaults. The FHA is not the lender, they only insure the loans. The lender must meet specific requirements outlined by the entity in order to qualify for the insurance. Now you need to recognize the two biggest differences between the programs and how they will benefit you.
FHA Refinance
A regular FHA Refinance offers the borrower the opportunity to get a better interest rate on their home loan (if you have another type of mortgage, you can refinance into an FHA loan). The FHA Refinance Program benefits you if your home was lucky enough to increase in value during the mortgage crisis. The programs beneficial feature is to refinance your current mortgage into a new mortgage.
FHA Streamline
The FHA Streamline Refinance program benefits you by reducing the interest rate on your current mortgage. There is far less paperwork involved which reduces the amount of time it takes to close the loan. The program saves you time and money and lenders can quickly cut down the amount of time it takes lenders to work on your new loan. In order to be eligible for an FHA Streamline refinance, you must already have an FHA loan. You do not need to have equity in your home and are not required to provide an appraisal, but you do need to have a good history of making your mortgage payments on time.
VA Loans
The VA is the Veterans Administration. They too are a government entity that provides mortgage insurance to veterans along with other services. VA loans are only provided to Veterans and military service members that meet a certain criteria, but offer some of the most attractive terms as far as being financed up to 100% of the purchase of a home.
VA Refinance
The VA Refinance Program allows you (if you are a veteran) to refinance up to 100% of the value of your home. You are able to refinance under a VA loan if you have another kind of loan initially, but you must first meet the requirements of the VA and get a certificate of eligibility.
VA Streamline Refinance
The VA Streamline Refinance Program is also known as the VA to VA loan. The primary goal of the program is to continue to lower the original principal amount of the loan and to obtain a lower interest rate and payment amount. You cannot take cash from the equity in your home through this program. This program has a lot less paperwork as well which leads to a quicker close on the loan. This program also does not require an appraisal on the home.
