Homeowners with a Texas FHA loan or Texas VA mortgage who are interested in taking advantage of these super low rates we’re currently seeing may be in luck. These government backed programs allow for a simplified, or “streamlined” refinance option for mortgage holders who qualify. This allows borrowers to take advantage of lower Texas mortgage rates while avoiding many of the up front costs and steps associated with a traditional refinance.
VA Streamline Refinance
Called an Interest Rate Reduction Refinancing Loan or IRRRL, the Department of Veterans Affairs allows a streamlined refinance from one VA loan into a new VA loan. The new loan must have a lower interest rate, unless an adjustable rate mortgage is being refinanced into a fixed rate loan. The VA does not require an appraisal, credit report, or certificate of eligibility for an IRRRL (though the lender may have additional requirements including some of these items.) An IRRRL cannot be used for a cash-out refinance, but can be used to refinance with little to no out of pocket costs.
FHA Streamline Refinance
Similar in many ways to the VA program the Federal Housing Administration allows a streamlined process when refinancing one FHA insured loan into another. The new loan must have a lower monthly payment, and to be eligible the borrower must be current on their mortgage payments. FHA streamlined refinances also cannot be used to take cash out. The FHA does not require an appraisal, credit report, or termite inspection – items which are normally needed. Again, the lender may require more than the FHA in order to approve the loan.