- A streamline refinance lets you refinance your FHA, USDA, or VA mortgage without an appraisal.
- You may not need to show your credit score or debt-to-income ratio, either.
- You'll refinance into the same type of mortgage, like from one FHA loan into another FHA loan.
Lenders like to advertise quick and easy refinances, but they don't always end up that way when you factor in all the new paperwork you'll have to deal with and the money you'll have to spend. But in certain cases, refinancing can actually be relatively easy.
A streamline refinance is one such scenario. These offer a simple way to refinance a government-backed mortgage and come with multiple benefits. Here's everything you need to know about streamline refinances.
Understanding streamline refinance requirements
With a streamline refinance, you can refinance your mortgage without going through an appraisal. In many cases, you won't need to show your credit score, debt-to-income ratio, or proof of income, either.
You can streamline refinance government-backed home loans — including mortgages through the FHA, VA, or USDA ones — but not conventional mortgages. You're refinancing from one type of mortgage into the same type again. For example, you'd refinance from an FHA loan into another FHA loan.
You may decide to refinance with the same lender you used for your initial mortgage, but you don't have to. Your best bet is to shop around for the lender with the lowest rates and fees.
FHA streamline refinances
An FHA streamline refinance switches out your FHA mortgage for a new FHA loan with a different term length and interest rate.
You can refinance into either a 30-year mortgage or 15-year mortgage. If your initial FHA mortgage had a 30-year term, you can't refinance into a 15-year term, but you can go from a 15-year term into a 30-year mortgage refinance to get lower monthly payments. You can choose between a fixed-rate mortgage and an adjustable-rate mortgage.
Streamline refinance requirements for FHA loans state that the new loan must offer a "net tangible benefit" for your household. The exact rules depend on several factors, but in general, you'll need to get a lower mortgage refinance rate to qualify. Switching from an ARM to a fixed-rate mortgage is also considered a net tangible benefit, because predictable fixed rates can make it easier for you to stick to a budget and stay current on your mortgage payments.
VA streamline refinances
A VA streamline refinance, also known as a VA Interest Rate Reduction Refinance Loan (IRRRL), is a type of refinance for people who already have a mortgage backed by Veterans Affairs. You refinance from one VA mortgage into another.
The home doesn't have to be your primary residence right now, but you must have lived there at one point. You must also benefit financially from the refinance to qualify.
USDA streamline refinances
When it comes to streamlining your USDA refinance, you have two options: a USDA streamline refinance and USDA streamlined assist refinance. They are both tools for refinancing from one USDA mortgage into a new one, and in most cases, neither requires an appraisal. But there are some key differences between the two.
With a USDA streamline refinance, guidelines require you to show the lender your credit score and debt-to-income ratio to qualify. You can add or remove someone's name on the mortgage.
A USDA streamlined assist refinance does not require you to show your credit score or DTI ratio. You can add someone's name to the mortgage, but you can only remove a name if the person has died.
A USDA streamline refinance doesn't mandate that you benefit financially from getting a new loan, but the USDA streamlined assist refinance does.
Essential eligibility criteria
The exact requirements of a streamline refinance depend on your mortgage type, but one thing they all share? You must be current on your mortgage payments. This means you haven't been late on any of your monthly payments in recent history (on USDA loans, you need to have on-time payments for at least the last year).
Tips to speed up the process
Streamline refinances are designed to be quick and easy, but there are ways you can help yours move even faster. You can:
Choose a lender with streamline expertise
The more experience a lender has in streamline refinances for your exact mortgage type, the more efficiently they'll be able to handle and process yours. Always shop around for your lender, and ask your loan officer about their expertise in your loan type. Not all lenders are created equal, and some even specialize in certain loan types, which can help your loan move even faster through the pipeline.
Gather required documents early
Don't wait until you've filled out an application to start gathering your financial documents. If you know a refinance is on the horizon, start pulling together paperwork right away. Get your most recent tax returns, W-2s, pay stubs, bank account statements, and any other income-related documentation you may need (like proof of Social Security or child support payments, for example.) This will help the process move faster once your loan moves into underwriting.
Be responsive to lender requests
No matter how prepared you come into the process, your loan officer is likely going to have some questions or request further documentation at some point along the way. When they do, respond quickly — within a day or two at most. Delayed responses will only hold up the underwriting process and delay your closing date.
Consider tech-forward lenders
Technology has come a long way in the mortgage world, and choosing a lender that leans heavily on tech-driven processes can help your loan move faster and more efficiently. Always ask about a lender's technology when choosing which of the best streamline refinance lenders to apply with. Do they offer online document uploads? Can you sign paperwork remotely? Do they offer remote closings? These can all help your streamline refinance close faster.
FAQs
As with any refinance, your savings depend on your current rate and loan terms — as well as the rate and loan term you're refinancing into. With most streamline refinances, there needs to be a "net tangible benefit" for you to qualify.
Typically, no. Streamline refinances are usually for changing your rate and term only, though you may be able to get cash out if you have a significant amount of equity built up in your home. If this is something you're interested in, ask your loan officer.
You usually do not need an appraisal when doing a streamline refinance. This saves you on time and money, as an appraisal typically adds at least a few hundred dollars to your closing costs.
Streamline refinances are often faster than traditional refinances and may be able to close within a few weeks. This depends on your lender's capacity and how responsive you are to documentation requests, though.
If you qualify for a streamline refinance and are aiming for a lower interest rate or monthly payment, they can be a smart choice for refinancing your mortgage.
The upside of streamline refinances is that they usually require no appraisal, saving you time and money. They often require no credit score or DTI check and can be easier to qualify for, too. On the downside, streamline refinances come with closing costs and you usually can't take cash out.
If you're wondering how to get the best streamline refinance rate, wait until you have plenty of equity in the property, as this lessens the risk for the lender and could qualify you for a lower rate. If you have a high credit score, you can also ask the lender to consider that in your application, as it could lower your rate as well.
