What is a Rate Reduction?

HUD has permitted homeowners to lower the interest rate on FHA & VA insured mortgages since the early 1980's. The "streamline" refers only to the reduced underwriting requirements and the minimal documentation that the borrowers need to supply the lenders. This does not mean that there are no costs involved in the transactions. Some streamlines have costs involved that the borrowers must add to their loan balance or pay out of pocket.

We specialize in a special streamline program called a "Streamline Rate Reduction". This program allows borrowers to get lower interest rates, WITHOUT adding the actual fees to the principal loan balance. This is how the program works.

1. As you know, banks earn interest and other revenue by issuing loans. Banks also earn money from new loans produced. Instead of retaining all of the revenue earned from the loan, we use a portion of the money to pay some or all of the title charges and avoid charging points. These are charges that the borrower typically pays.
2. There is a distinct difference between our Rate Reduction Program and a standard FHA streamline refinance. Traditionally when a borrower refinances with a mortgage company or bank, the settlement fees (title fees) and closing costs are paid at closing or added to the loan balance. By having the fees credited, the borrower avoids adding the fees to the loan balance! In many cases, title fees alone can exceed $2000.00, so having the fees credited is beneficial for many borrowers.
3. The borrower receives a lower payment, without increasing the loan balance with fees. We earn whatever money is left over after we pay the transaction fees. It is a win-win transaction.