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FHA STREAMLINE REFINANCE
FHA streamline with credit score in the low 500’s, is it possible? I have an excellent mortgage payment history.
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1 Reply
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With an FHA Streamline Refinance, borrowers have a much easier time. They can save a lot of money throughout the life of the mortgage. However, to qualify, one must meet certain eligibility requirements, including a credit score. So here are some of those specifics that need to be kept in mind:
FHA Streamline Refinance Basics
Purpose: This program aims to aid homeowners who currently hold an FHA loan to refinance their mortgage quickly and without extensive documentation.
No Appraisal Required: One advantage is that it usually does not require an active appraisal, speeding up the process.
Credit Score Requirements
Minimum Credit Score: Although you can hear people saying that there is no need for a minimum FICO credit score to engage in Streamlined Refinances successfully, yes, there is such a provision within the FHA guidelines. Most lenders have their own requirements. Most lenders have resorted to a policy minimum credit score of 580 for streamlined retrieval facilities.
Lower Credit Scores: Finding a lender to accept your Streamline Refinance is nearly impossible if you have a credit score of approximately 520. However, Lenders will only reconsider your application if you make a good case with a significant mortgage repayment history and economic viability.
History of Mortgage Payments
Remarkable Payment History: An outstanding mortgage payment history is a major plus. If you could show that you were timely with your mortgage payments for the past twelve months, it might lessen the discrepancy caused by low credit ratings with some lenders.
The Appropriate Lender
Hunt For The Best: It is safe to say that talking to more than one lender will be worthwhile. Some lenders may be more forgiving regarding credit score requirements, such as those with a good repayment track record.
Credit Unions and Smaller Lenders: Try contacting credit unions or smaller banks, which may have less restrictive requirements than larger banks.
Other Factors
Debt Income Ratio: Lenders will also examine your debt-to-income (DTI) ratio. A low DTI ratio may increase your chances of eligibility.
Current FHA Loan: Ensure your current loan is FHA since the Streamline Refinance applies only to FHA-insured loans.
The one-pointer is that if applying for an FHA Streamline Refinance with a low 500 credit score appears tough for most, it is packed with solutions if one has a very good history of working repayments on mortgages. It would be ideal to seek advice from a few lenders to check what they offer. If you have further questions or need help, please ask!