The FHA Streamline Refinance is a
mortgage product, set aside for homeowners with who currently have an existing
FHA mortgage. Homeowners with conventional mortgages through Fannie Mae or
Freddie Mac do not qualify for this type of loan. FHA Streamline Refinances are
the fastest, simplest way for FHA-insured homeowners to refinance their homes. This type of
refinancing option reduces your monthly expenses by lowering your payments, but
there is no option to receive cash back.
The FHA Streamline Refinance program's
defining attribute is that it does not require a home appraisal. Instead, your
original purchase price is used as your home's value, regardless of the actual current
value the home. This is good news those
who are underwater on their mortgage. Even if you owe twice what
your home is now worth, the FHA will refinance your home without any additional
cost or penalty. The program also allows for unlimited loan-to-value with its
Streamline Refinance program
Keep in mind that FHA refinancing is only
available to homeowners who are currently using their home as their principal
residence, or owner occupied.
Although the FHA Streamline Refinance avoids
the "traditional" mortgage verification of income and credit score, the
program does implement minimum standards for applicants. The FHA Streamline Refinance guidelines are as
follows:
·
12-Month
Payment History Required - One of the qualification standard is that
homeowners choosing Streamline Refinance program must have a mortgage payment
history for 12 months with no late payments. Loans will need to be current at
the time of closing.
·
Waiting
Period Between Refinances - The FHA requires that borrowers make 6 mortgage
payments on their current FHA-insured loan. After the 210 days waiting period a
borrower will be eligible for another Streamline Refinance.
·
Employment
And Income Are Not Verified - The FHA Streamline program does not require
verification of a borrower's employment or annual income as part of the FHA
Streamline process. There is no Verification of Employment, nor are there
paystubs, W-2s or tax returns required for approval. You can be unemployed and
get approved for a FHA Streamline Refinance so long as you still meet the other
program requirements. Keep in mind that certain lenders may still request this
information in order for them to approve your loan.
·
Credit
Scores Are Not Verified -
The FHA does not verify credit scores as part of the FHA Streamline Refinance
program. Instead, it uses payment history as a gauge for future loan
performance. This means that FICOs under 640, are eligible for Streamline
Refinances. Certain lenders will still require a minimum credit score in order
for your loan to be approved by that specific lender.
·
The
Refinance Must Have Benefit to the Borrower - Streamline Refinance applicants must
demonstrate that there's a Net Tangible Benefit in the refinance. The purpose must
show a legitimate reason such as, reducing your mortgage payment (principal +
interest + mortgage insurance) by 5 percent or more. Even lowering your term to pay off your loan
sooner. Another allowable benefit is to refinance from an adjustable ARM into a
fixed rate loan. Cash out is not considered a Net Tangible Benefit.
·
Closing
Cost May not be Rolled into the Loan Amount - FHA does not allow Streamline Refinance loan balances to be
raised in order to cover cost to complete the loan. The new loan balance is
limited by the math formula of (Current Principal Balance + Upfront Mortgage
Insurance Premium). All other costs such as origination charges, title charges,
escrow etc., must be either paid by the borrower at closing, or credited by the
loan officer or lender to create at zero-cost FHA Streamline.
·
Appraisals
Not Required - FHA
does not require appraisals for its Streamline Refinance program. Instead, it
uses the original purchase price of your home, or the most recent appraised
value, as its valuation point. Homes that are underwater are still FHA
Streamline-eligible.
FHA
rates are low and lender credit is high. Contact me for more information. We
have zero-cost FHA Streamline Refinancing available.
