One of the more frequently asked questions I get revolves around the timing for mortgage refinancing with FHA streamline loans.  Borrowers want to know when to time streamline refinancing.  The first question I ask them is, “Do you currently have a FHA mortgage.”  If they say no, then I remind them that FHA streamlines are for homeowners who already have a FHA home loan.  If they say yes, then I ask them, “Are you seeking cash back in the refinance loan?” If they say yes, then I remind them that streamline loans are only for rate and term refinancing, meaning, no cash out is allowed.”

The best time to streamline refinance your FHA mortgage is when you are saving a significant amount of money each month without adding on additional years with the new loan terms.  As far a percentage goes, (ie if you can reduce your rate by 1%) I tend to stay away from that type of a rule, because it depends on what type of mortgage you have (ie. Fixed or adjustable rate) and how big your loan amount is.  For example, a borrower reducing their rate half a percentage point on a $500,000 mortgage will actually save more money a month than a borrower who reduces their rate by 2 percentage points on a $100,000 loan because the loan amount is so much greater.  FHA streamline refinance loans were developed in an effort to automate the refinance process for good FHA customers and reward them with a reduced cost FHA mortgage at a very low interest rate.