Refinancing Goals

• Homeowners refinance for various reasons. Some people refinance to get out of an adjustable rate mortgage (ARM) as interest rates rise so they can lock in a fixed rate, according to Lending Tree. Many homeowners refinance when rates are low to get a better interest rate. Lowering your loan rate even a fraction of a percentage can save you a lot of interest money during your loan repayment. Others refinance to spread their loan balance back out over 15 or 30 years, lowering their monthly payment.
  
  

Investment Considerations

• Financial advisers often point out the importance of treating a mortgage refinance like a financial investment. When refinancing, you typically pay closing costs that are similar to those paid on your initial loan. Lending Tree notes that around 3 percent of the new loan is a common amount for closing costs, which includes various lender fees and other fees for getting a new loan. You have to weigh how much you save per month on a new loan and how long you plan to stay in the home versus the upfront investment in closing costs. If you will not stay in the home long enough to recoup your investment, refinancing makes little sense.
  
  

FHA Streamline Refinancing

• Some conventional loan banks and mortgage lenders have offered versions of streamline or efficiently refinanced mortgage processes in the early 21st century. However, streamline refinancing has traditionally been associated with government sponsored loan programs from the Federal Housing Authority (FHA) and Veteran's Administration (VA). According to the Mortgage Loan website, FHA loans often include opportunities for streamline refinancing to lower rate loans if you have a current loan in good standing. These loan programs provide opportunities for those with low credit scores to get a house loan. By enabling an efficient refinancing process, the FHA puts its borrowers in a better position to keep up with loan payments, which is good for the borrower, the lender and the real estate market.
  
  

How Streamline Refinancing Works

• The streamline process is performed under the premise that if you can afford your current loan, you can afford lower payments on a lower-rate refinanced loan. To streamline the process, FHA lenders eliminate time-consuming activities common to normal refinancing processes, such as the requirement for a new home appraisal. Often coinciding with streamline refinancing are opportunities to get no-cost refinancing by paying a slightly higher interest rate. Some homeowners are leery about scam offers from banks of zero-cost refinancing. However, many FHA lenders (and some conventional banks) are able to offer legitimate no-cost refinancing because they make up the closing costs by having you pay a slightly higher interest rate than you would if you paid closing costs out of pocket.