Many people in California that are currently in an FHA loan have heard at least something about the California FHA streamline program and call us with their questions. One of the most popular questions that we receive about the program is:
“how much in closing costs should we expect when we go through the FHA streamline program?”
When people ask us this question, our general answer is:
“it depends.”
California FHA Streamline Closing Costs:
Anytime you have a transaction as large as your home, there are going to be costs involved — and FHA wants to be sure that any costs involved with the FHA streamline program don’t outweigh the benefits. With the FHA streamline refinance program, there are lender fees, title fees and possibly appraisal depending on if you are trying to do a streamline-with-appraisal program or not.
The sum total of these fees should be somewhere in the neighborhood of 2-3% of your loan amount.
California FHA Streamline Closing Costs: No Out Of Pocket Closing Costs
One of the nice things about the FHA streamline refinance program is that FHA will allow you to roll your closing costs into the loan and not make you “write a check” to cover them. When you choose to have the lowest rate available and “pay” the closing costs, you can roll those closing costs into the loan.
Whenever you roll the closing costs into the loan as part of the transaction, it is called a “no out of pocket closing costs” loan.
California FHA Streamline Closing Costs: No Closing Costs
A different option with the FHA streamline program is to have the lender pay your closing costs — which is different than you rolling your closing costs into the loan.
The lender will generally be happy to pay your closing costs for the FHA streamline program in exchange for a higher interest rate. If the lowest rate available is 5% on a given day, the lender may agree to pay your closing costs in exchange for you having a higher interest rate – for example it may be 5.5%.
Which is the better financial option for you:
- FHA Streamline With No Out Of Pocket Closing Costs
- FHA Streamline With No Closing Costs
It depends.
Make sure you speak with one of our mortgage experts about which option is right for you — every situation is different and it is important to work with a California FHA streamline expert!
