Common misconceptions about streamline refinance
Introduction
Streamline refinance is a popular mortgage refinancing option for borrowers who want to lower their monthly mortgage payments by taking advantage of the current low-interest rates. Unfortunately, there are many common misconceptions about streamline refinancing that prevent borrowers from taking advantage of this option. In this article, we will debunk some of these misconceptions and provide you with accurate information about streamline refinancing.
Misconception #1: Streamline Refinance is Only for FHA Loans
Many people believe that streamline refinance is only available for FHA loans. However, conventional loans also have their own version of streamline refinance. It is known as the “Standalone” or “Limited Review” refinance. This option allows you to refinance your conventional loan without a full appraisal or income verification process, making the refinancing process faster and easier.
Misconception #2: You Must Wait Six Months to Refinance
Another common misconception is that you must wait six months after closing your loan to refinance. This is not true. You can refinance your loan as soon as you want, as long as you can benefit from the lower interest rates. However, some lenders may have their own seasoning requirements, so it is essential to check with your lender before proceeding with the refinance.
Misconception #3: Streamline Refinance is Expensive
Some borrowers believe that streamline refinance is too expensive. This is not true. Streamline refinance is a cost-effective option for borrowers who want to lower their monthly mortgage payments. The closing costs and fees associated with streamline refinance are relatively lower than those associated with traditional refinancing.
Misconception #4: Streamline Refinance is Only for Lowering Interest Rates
Many borrowers believe that streamline refinance is only for lowering their interest rates. However, streamline refinance can also help you switch from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage (FRM), which can provide you with more financial stability and predictability.
Misconception #5: Streamline Refinance Means Starting the Mortgage Process Over
Another common misconception about streamline refinance is that it means starting the mortgage process over. This is not true. Streamline refinance is a simplified version of traditional refinancing, which requires less documentation and a shorter processing time. If you already have an FHA or conventional loan, streamline refinance can help you lower your monthly mortgage payments without having to go through the entire mortgage process again.
Misconception #6: You Can Only Streamline Refinance with Your Current Lender
Finally, some borrowers think that they can only streamline refinance with their current lender. This is not true. You can refinance with any lender that offers streamline refinance, regardless of who your current lender is. It is essential to shop around for the best rates and terms before choosing a lender for your streamline refinance.
Conclusion
Streamline refinance is a viable option for borrowers who want to lower their monthly mortgage payments. It is essential to understand the common misconceptions about streamline refinancing before proceeding with the refinance. By debunking the myths and learning about the facts, you can make an informed decision about whether streamline refinance is the right option for you.