The FHA has created an Interest Rate Reduction Loan program called the Streamline Refinance. This provides a way for current FHA homeowners to lower their interest rate with little or no out-of-pocket costs. These loans can also be made faster and with less documentation than a typical loan. "No Cost" Streamlines let you refinance your mortgage with no out-of-pocket expenses.
The FHA has permitted streamline refinances on insured mortgages since the early 1980's. The "streamline" refers only to the amount of documentation and underwriting that needs to be performed. The basic requirements of a streamline refinance are:
The mortgage to be refinanced must already be FHA insured
The mortgage to be refinanced should be current
The refinance is to result in a lowering of your monthly principal and interest payments
No cash may be taken out on mortgages refinanced using the streamline refinance process
There is no out-of-pocket expense for the streamline refinance. Closing costs are minimized and can be "rolled" into the new mortgage amount. Streamline refinances can be done without appraisals, as long as the new loan amount does not exceed the original loan amount.
If the Streamline Refinance makes sense for you, the approval process is easy:
No minimal credit score requirement
No income verification
No asset verification
No appraisal required
Minimal employment verification
FHA Streamline Refinance Update
This update contains the pertinent changes to Streamline Refinance guides as outlined in Mortgage Letter 2009-32 and are effective as of November 17th, 2009.
11 things you should know about these changes:
Current loan must have 6 months seasoning.
Current loans with 6 to 12 months seasoning, NO 30 day late payments are allowed.
Current loans with 12 month seasoning or greater there is a maximum of ONE 30 day late payment in the last 12 months.
Refinance must reduce PITI by 5%, OR take them from an ARM to a Fixed (Fixed rate can’t be more than 2% higher. For Hybrids, new fixed rate can’t increase more than 20%), OR take them from a Fixed to an ARM (ARM must be 2% less than fixed rate).
If borrower is reducing the term, it must be processed as a rate and term refinance.
Investment properties and second homes are no longer eligible for the Streamline Refinance program.
Lender must include a signed and dated letter on their letterhead, that the borrower is employed and has current income.
The maximum CLTV is 125% of the new value or the original value if the loan is processed WITHOUT an appraisal.
Lenders should NOT use TOTAL on Streamlines unless they want to process the loan as a regular rate and term refinance.
Lenders may NO LONGER use the short URLA (1003).
Payoff statement of current mortgage CANNOT include delinquent interest, late charges, or escrow shortages.
To reduce your mortgage payment with an FHA streamline, fill out the No-obligation request form. Click button below to get started.