A Streamline Refinance Explained

HI, I have heard of a refinace mortgage, with the same lender, that forgos many fees, such as appraisal, etc. ..what is the name of this type of loan?

2 Answers

Some lenders do offer programs like this and they have various names for them, such as " Fast Track Refinance". They have basic guidelines to follow such as the borrowers must be at the same jobs as before, making the same income as before. A credit report is pulled to verify that no mortgage lates are showing but there is no scoring system used. If the payment goes up or any cash is taken out of the refinance then they would have to get a special approval or the loan may be converted to a regular refinance.

The main benefit is the lack of needed information, however most of these programs are now requiring an appraisal as values may have changed.

These loans can be benefitial, however most lenders that will do this on a conforming loan are a lender servicer and their normal (regular) rates are higher. They may not charge origination fees either and advertise no closing cost mortgages at no adittional rate, they can do that because the rates are higher for every type of loan. You probably won't see this from a lender that is not a bank, or does not own a bank and service their owne loans.

If However your loan is an FHA or VA loan; you can do an FHA streamline refinance with ANY lender approved to do FHA and you can do an IRRL (interest rate reduction loan) -with any lender that is VA approved, if you have a VA loan. There are some restrictions to each of these but for the benefits it is worth taking a look at, and they (the restrictions) are similar to a "Fast Track" type of loan.

The best loan for you is one that takes into consideration your wealth building and tax strategies, and should be structured with a Mortgage Planner who is able to meet with your tax and financial advisors in person.

Hope that Helps!

Typically this is called a streamlined refinance. This is not uncommon, and is a tactic that many lenders use to intice new loans. Simply put, this is just the lender using some of the yield spread (commission), and using it to pay your costs.

Again, it is not uncommon and depending how old your underlying mortgage is, it could be a bad idea(i.e. you only have 23 years left and you are only saving 60.00 a month). These lenders offer you this so you will stay with their company and they can continue to rake in the enormous servicing fees that accumulate while you remain a customer. It also should be noted that each time they do not service your loan, they simply package it in a group and sell for a large profit, which is a win for them.