What To Do Before Applying To An FHA Streamline Program
The FHA Streamline refinancing program allows people with Federal Housing Administration (FHA) home loans to refinance using a faster method -- hence the term "streamlined" in the name -- so that they can reduce their monthly payments. While being approved for this streamlined program is often a lot easier than trying to refinance a more traditional mortgage, you'll still have to qualify for the refinancing. There's never a guarantee you'll be approved, but you can increase your chances.
Ensure your payments are up-to-date
This is a requirement: Your payments on your current FHA mortgage must be up to date. If you are even a couple of days late, or even if your current payment hasn't cleared yet, get everything paid completely. You don't want even a hint of "where's that last payment" entering into the conversation when you apply for the refinancing.
Something that's not a requirement but that still looks nice is paying a bit early. In other words, if you've got a payment due on the 15th, and it's currently the 5th, make that payment and ensure it clears. That simply eliminates the possibility that you'll forget the payment or that it will be delayed, thus delaying your application.
Review your credit reports
You'll find that the refinancing application is a lot easier on your credit this time around, but you will still want to know where you stand. Review your credit reports and clear up mistakes that may have popped up since you last saw them. If you keep your credit reports frozen, thaw them for the days surrounding the application process.
Create a new budget
Work out what your budget would be if you refinanced. The refinanced loan must provide a "net tangible benefit," meaning that you have to get something positive out of refinancing. For example, say refinancing would reduce your monthly payment by only a few dollars, you're currently not having trouble making your payments, the interest rate doesn't really change, and so on. Those few dollars in savings may not be a big enough benefit to warrant making the loan company go through refinancing paperwork. However, if the refinancing would lower your payment when you're having trouble making the current payment, or if the interest rate dropped substantially, those could be big enough advantages that undergoing the refinancing is absolutely worth it for all concerned.
Streamlined refinancing can go very quickly if you have everything in order. Speak with your lender about what they want to see before you start your application.