Utah FHA Streamline Loan Refinance

If you currently have an FHA loan in Utah and want to lower your monthly mortgage payments or interest rate, one option to consider is a Utah FHA streamline refinance loan. This type of refinance mortgage requires minimal paperwork, and your lender will not have to verify your credit or income. You also won’t have to worry about a home appraisal. A streamline FHA refinance loan in Utah closes faster than other types of mortgage loans, and the closing costs are also slightly lower. Here’s what to know about FHA streamline refinance loans in Utah from the mortgage experts at City Creek Mortgage.

What is a Utah FHA Streamline Refinance Loan?

The FHA streamline refinance loan is a type of refinance that is only available to people who currently have FHA mortgages on their home. This program enables you to replace your existing FHA mortgage with a new loan at a lower interest rate and lower monthly payments.

This type of loan is called a “streamline” refinance because it requires much less paperwork and less time for underwriting. It is designed to make it cheaper and simpler for current FHA borrowers to refinance their loans and obtain a lower interest rate, lower payments, or switch to fixed-rate mortgages from adjustable-rate mortgages (ARMs).

In most cases, a Utah FHA streamline refinance does not require a home appraisal and does not require income verification, and does not require a credit check. 

Utah FHA streamline refinance mortgages are available in credit-qualifying and non-credit-qualifying versions. The non-credit-qualifying FHA streamline refinance option doesn’t require your lender to check your income or credit. 

If you have a high credit score, a credit-qualifying FHA streamline refinance mortgage might be a better option. While your lender will check your debt-to-income ratio and credit, this type of refinance mortgage can help you secure a much lower interest rate.

Benefits of an FHA Streamline Refinance

If you have an existing FHA mortgage, an FHA streamline refinance offers the following benefits:

• Lower interest rate – If the interest rate on your existing FHA mortgage is high, you can replace it with a new FHA mortgage with a lower interest rate. This can save you substantial sums over the life of your loan.
• Lower monthly payments – Refinancing your existing FHA mortgage can help you reduce your monthly mortgage payments.
• No home appraisal – The amount of your refinance mortgage will be based on what you currently owe on your existing FHA mortgage rather than on the value of your home. This is important if you are currently underwater on your home and owe more than what it’s worth because of declining values.
• No credit check or income verification – For non-credit-qualifying FHA streamline refinance loans, your lender won’t verify your income or check your credit, allowing you to qualify even if your debt-to-income ratio is high or if you have some negative marks on your credit history.
• Pay off your mortgage faster – You can build equity faster and pay your mortgage off faster if you switch from a 30-year FHA mortgage to a 15-year loan through a streamline refinance.
• Switch to a more predictable loan – If you have an existing FHA ARM, you can use the FHA streamline refinance loan process to switch to a more predictable (and less risky) fixed-rate FHA mortgage.

You can’t use an FHA streamline refinance to get more than $500 cash out and must also have made at least six consecutive payments on your existing FHA mortgage.

What Are the Eligibility Requirements for a Utah FHA Streamline Refinance?

To qualify for an FHA streamline refinance mortgage in Utah, you must meet the following eligibility requirements:

• Only available to borrowers with existing FHA loans in Utah
• Must have a legitimate reason for the loan and receive a tangible benefit (refinancing from an ARM to a fixed-rate mortgage or obtaining a reduction of at least 0.05% of your current mortgage payment)
• Must have made six or more on-time payments on your existing FHA mortgage
• Your first payment must have been due six or more months ago
• It must be at least 210 days since you closed on your first FHA mortgage
• Living in your home as your principal residence
• Have enough money to pay closing costs

Unlike your initial FHA-backed loan, you can’t roll the closing costs into your mortgage and will need to have enough money to cover them.

Application Process for an FHA Streamline Refinance in Utah

1. Meet the Waiting Period Requirements

If you recently took out your original FHA loan, you will need to wait until at least 210 days after your loan closed before applying for an FHA streamline refinance mortgage. You will also need to make six on-time payments consecutively and should not have more than one payment within the last 12 months that was more than 30 days past due.

2. Search for an FHA-Approved Lender

You’ll need to look for an FHA-approved lender. You don’t necessarily have to choose your current lender and should instead compare the requirements, fees, and rates offered by others. City Creek Mortgage can help you identify various lenders and compare and contrast their fees and rates to help you make an informed choice.

3. Gather the Required Documents

While FHA streamline refinance mortgages require minimal documentation, you’ll still need to provide some information about your current FHA mortgage and your finances. The lender will have a list of documents you should gather and submit when you apply.

4. Complete the Loan Application

Once you have chosen an FHA-approved lender and gathered the documents, you can apply for an FHA streamline refinance loan by completing the loan application with the lender you have selected.

5. Pay MIP and Closing Costs

When you refinance your FHA mortgage with an FHA streamline loan, you’ll need to pay the closing costs charged by your lender. Your lender can’t roll the closing costs into the new mortgage under FHA rules. As a result, some lenders offer streamline refinance loans with no closing costs by charging higher interest rates. If you can, it’s best to have enough money saved to pay the closing costs in cash.

You’ll also need to pay the mortgage insurance premium (MIP) on your new FHA refinance mortgage. However, if you are within three years of when you first obtained your current FHA mortgage, you might receive a small refund of your MIP from that loan.

Documents Needed for FHA Streamline Refinance Loans

Each lender might have different documentation requirements, but most require borrowers to submit the following items:

• Your current mortgage bill showing you are current on your payments
• Your existing mortgage documents showing your payment amount and interest rate
• Homeowner’s insurance policy
• Bank statements for the last two months showing you have enough funds to pay closing costs

If you are applying for a non-credit-qualifying streamline refinance, the lender will run a mortgage-only check to ensure you have made on-time payments and verify you meet the FHA’s criteria. However, your lender will not perform a full credit check, and this should not affect your credit score.

FAQs

1. Can I get a Utah FHA streamline refinance loan if my home value has decreased?

When you apply for a Utah FHA streamline refinance loan, you won’t have to worry about a new home appraisal. Instead, the amount of your new loan will be based on how much you currently owe on your existing FHA mortgage.

This means that it is possible to get an FHA streamline refinance mortgage even if you are currently underwater on your existing FHA mortgage because of falling home values.

2. Will my mortgage insurance go away?

Getting an FHA streamline refinance loan will not get rid of your required mortgage insurance. You will need to pay a new upfront MIP and make annual mortgage insurance payments.

However, if you get a Utah streamline refinance mortgage within three years of when you first took out your current FHA mortgage, you will get a refund of some of the mortgage insurance you have paid. This will be based on how close you are to when you originally took out your mortgage. The refund amount grows smaller the closer to three years you are.

3. Do you have to pay anything upfront to get an FHA streamline refinance?

Unlike an initial FHA mortgage, you can’t roll closing costs into an FHA streamline refinance. If your lender charges closing costs, you will have to pay those out-of-pocket.

However, some lenders offer no-closing-cost FHA refinance loans by charging higher rates of interest. You’ll also have the upfront MIP, but you might be able to cover it with a refund of your MIP from your current loan if you obtained it within the past three years.

Contact City Creek Mortgage

If you have an existing FHA mortgage in Utah and would like to obtain a lower payment, lower interest rate, or change from an ARM to a fixed-rate mortgage, a Utah FHA streamline refinance might be a good choice. The mortgage professionals at City Creek Mortgage can help you find lenders and help you compare and contrast their fees and terms. To learn more, schedule a consultation today by calling us at (801) 501-7950.