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 by the mortgage company, and
does not mean that there are no costs involved in the transaction.
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
(not delinquent).
• The refinance is to result in a lowering of the
borrower's monthly principal and interest payments.
• No cash may be taken out on mortgages refinanced
using the streamline refinance process.
Companies may offer streamline refinances in several ways. Some companies
offer "no cost" refinances (actually, no out-of-pocket expenses
to the borrower) by charging a higher rate of interest on the new loan
than if the borrower financed or paid the closing costs in cash. From
this premium, the company pays any closing costs that are incurred on
the transaction.
Companies may offer streamline refinances and include the closing costs
into the new mortgage amount. This can only be done if there is sufficient
equity in the property, as determined by an appraisal. Streamline refinances
can also be done without appraisals, but the new loan amount cannot exceed
what is currently owed, i.e., closing costs may not be added to the new
mortgage with those costs either paid in cash or through the premium rate
as described above. Investment properties (properties in which the borrower
does not reside in as his or her principal residence) may only be refinanced
without an appraisal and, thus, closing costs may not be included in the
new mortgage amount.
• Bankruptcy and Foreclosure
• FHA Bridal Registry Account
• FHA Mortgage Insurance
• HUD Reverse Mortgage Program
• Refunds on FHA Loans
• Single Family Rehab Mortgage Program
• Streamline Refinancing for
FHA Mortgages
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