The FHA Streamline Refinance loan is one of the simplest and fastest way for those with FHA mortgages to refinance their loans into the latest mortgage rates. Below are some fast facts about this refinance program:
What Exactly is an FHA Streamline Refinance Loan?
It’s a refinance program exclusive to borrowers that have existing FHA home loans. A home appraisal isn’t required and you could use your home’s original purchase price as its current value, even if isn’t exactly what it’s currently worth. A loan officer from City Creek Mortgage adds that the FHA streamline program would still refinance your property even if you owe significantly more than your current home’s value and you have an underwater mortgage.
No Home Appraisal and Verification of Credit, Income, Job
Basically, you could have bad credit, no equity in your home, without work and consequently income, but still be eligible for an FHA streamline refinance loan. But…
You Have to Have a Three-Month Perfect Payment History
This is the number one eligibility requirement imposed by the FHA. You also can’t have even one late payment in the past 12 months and your loans should be current at the closing time.
You Can’t Increase your Loan Balance to Cover the Refinance
This means that increase your FHA streamline refinance balance in hopes of covering related loan charges. Your new balance would be strictly limited to your “current principal balance plus upfront MIP or mortgage insurance premium” and you have to either have your loan officer credit in full or pay in cash all related costs such as escrow population, title charges and origination charges.
You Will Have to Pay Mortgage Insurance
You will be required to make two kinds of MIPs or mortgage insurance payments. One is the upfront payment you should pay at closing, and the other is a yearly payment divided into 12 installments that you have to pay along with your mortgage payment every month.
Summing up, the FHA streamline refinance program simplifies the refinance process by waiving typically required documentation such as job and income verification, credit and back account verification, as well as home appraisal. However, it is only available to borrowers with existing FHA home loans.