FHA Streamline Refinance Loans For FHA Homeowners

Find out how to make refinancing easy with the FHA Streamline Refinance Program.

The FHA mortgage program has an easy refinance program for those borrowers who currently have an FHA loan. The great news about this refinance program is that borrowers may not need a new credit report to qualify and may or may not need an appraisal to be completed.

The FHA streamline refinance mortgage program is an example where a government program actually makes more sense than private sector lenders. Fannie Mae and Freddie Mac experimented with a similar program over the past few years, but pulled back after the financial crisis of the past two years. While it would make sense that a borrower who is paying their mortgage loan at a high rate should be qualified for the same loan at a lower rate and payment, on the FHA streamline refinance program has grasped this concept.

Two Types of FHA Sreamline Programs

There are two types of FHA Streamline refinance mortgage programs. The first program is a streamline refinance without a new appraisal. Under this program, the borrower does not have to have a new credit report, does not have to verify income or employment and is not subject to a debt-to-income ratio analysis to qualify.

Streamline refinances without an appraisal can only be rate and term refinances with no cash out allowed as part of the transaction. The new loan amount can be the maximum of the original loan amount or the current loan amount plus closing costs, whichever is lower. For example, if you bought a home and your original loan balance was $200,000, you can refinance up to that $200,000 loan amount. If you have had your loan for even just a few years, the principal balance could be down to around $190,000. At that point you can do a refinance of the $190,000 and include closing costs as long as the total is below the original $200,000 loan amount. On the other hand, if your loan was down to $150,000, you could not refinance back out to $200,000 and get cash back.

The second program is the FHA Streamline Refinance with a new appraisal. As with the no-appraisal refinance, there is no credit qualifying and no requirement to document income, employment or assets. The new loan amount must be the lower of the existing loan plus closing costs or the maximum loan to value allowed for the FHA program of 96.5%.

Despite the fact that borrowers do not need a minimum credit score to qualify for the FHA Streamline Refinance program, many lenders will still run a credit report and impose some credit qualifying standards. For example, some lenders will require that borrowers show a credit history of no late payments over the past twelve months on their mortgage. In addition, some lenders will give borrowers with lower credit scores higher rates.

Who Are FHA Streamline Programs Good For?

On one hand, the FHA Streamline program is an easy way to refinance and cut your mortgage payments fast. On the other hand, the FHA Streamline Refinance program is perfect for borrowers who can afford their mortgage as demonstrated by their past history but for some reason might have trouble qualifying for a regular refinance. For example, the no-appraisal program is great if your home has lost value, if your income is below what is needed to qualify or if you are now self-employed and may have trouble verifying a two year income history.

Home owners can go to any FHA approved lender to refinance under the FHA Streamline Refinance loans. They are not forced to use their existing servicer.

For an exact rate quote and to see if you qualify for the FHA Streamline Refinance Program, complete a free rate quote request now!.

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