Wells Fargo, one of the major mortgage lenders in the Western states, offers loan modification and refinancing programs very similar to those offered by Fannie Mae and Freddie Mac. The bank is taking part in the FHA’s “Making Homes Affordable” program, designed to help keep homeowners afloat in a market where home values are rapidly declining. If you have a Wells Fargo mortgage you could be eligible for the Wells Fargo streamline refinance.
What does a streamline refinance mean?
Streamline refinance refers to the refinance of an existing FHA-insured mortgage. The benefit of a streamline refinance is that a borrower does not have to provide as much credit documentation, and the underwriting is limited. The streamline option can be a great way for homeowners to get out of an adjustable rate mortgage (ARM) and as a result save a nice amount of money on their monthly payments and overall interest costs.
Both the FHA and VA offer streamline refinancing for home mortgages.
How a Wells Fargo streamline refinance works
The FHA streamline is available to homeowners who currently have an FHA loan and are currently a Wells Fargo customer. Just like with other refinance options, a borrower must have a good payment history. One of the key differences between a streamlined refinance and a more conventional option is that lenders typically do not need an appraisal – which can cost $400 or more – to approve a streamlined loan, and homes that have lost value and are now underwater are still eligible.
One of the benefits of taking advantage of a streamline refinance is the reduced paperwork associated with refinancing. Existing Wells Fargo customers don’t have to pay application fees, either.
General interest rates are lower than they’ve been in a long time, but because the economy is on the upswing, rates could start to inch upward. If you lock into a Wells Fargo streamlined mortgage refi, you can reduce your monthly payment without a whole lot of hassle.
One of the best features of a Wells Fargo streamline refinance is the reduced paperwork and fees associated with a refinance. (Photo/Flickr)
Other considerations with a streamline refinance
FHA does not let lenders roll costs into the streamline loan. So, if you are considering a “no cost” refinance, it might have higher interest rates. The premium charged from the interest rates are what the lender pays borrower’s’ closing costs.
You cannot do a cash-out refinance requiring a title change through the streamlined refinance program either. If you’re an active duty service member, you may be eligible for a different variety of assistance programs. Look into the Servicemembers Civil Relief Act or applicable state law.
A streamline refinance may help you suspend a current foreclosure if you can prove this case, but you will have to submit copies of some proof of income, recent tax returns, monthly expense statement and a detailed description of your current hardships in addition to your mortgage refinance application.
Investment properties, or properties the borrower own but don’t live in, may be refinanced with a streamline option, but only without an appraisal.
Other types of mortgage refinances from Wells Fargo
If you’re not eligible for the Wells Fargo streamline refinance, or it doesn’t seem like the right fit for you, Wells Fargo also offers a number of other standard mortgage refinance options.
Popular loans include fixed-rate, which come in 15 and 30-year terms, and adjustable-rate refinance (ARM) options which come in 5, 7, or 10-year initial period terms. When comparing these options, it’s important to remember a few key points:
- Longer-term loans come with higher overall interest than shorter-term loans.
- Monthly principal and interest payments may increase when the interest rate adjusts on ARM refinances.
- Extending the length of your loan may end up costing a homeowner more money in the long run. Calculate your finances total costs before selecting a product.
Homeowners can also select from FHA and VA refinance options.
Wells Fargo also offers jumbo financing options if the property value on your home is larger than the conforming limits. Jumbo loans can finance up to 89.9 percent of a home’s value.
If you have equity in your home, you might also consider a Wells Fargo cash-out refinance. With a cash-out refinance uses the equity in your home to provide funds to a homeowner.
The minimum credit score for most products at Wells Fargo is 620. Certain products will consider non-traditional forms of credit history, like the amount of on-time rent payments a borrower has made.
The benefits of a Wells Fargo mortgage refinance
By choosing to use Wells Fargo to refinance your mortgage, you get the backing of one of the largest banks in the U.S., with all the security that entails. Wells Fargo has a better track record than Fannie Mae and Freddie Mac, which isn’t exactly saying much, but it’s definitely a good thing to keep in mind. Known for great customer service, Wells Fargo employees and bankers will always help you to figure out your finances and details surrounding your mortgage refinance.
As with any major financial decision, it’s always best to shop around and conduct thorough research. Use a refinance mortgage calculator to help determine which refinance product and lender make the most sense for you. If you’re having difficulty understanding the options available, consider using a mortgage broker. Though the charge a small fee, brokers can help assess your financial situation and pair you with the appropriate program to save you the most amount of money.