October 5th, 2011 3:32 PM by Bob Rutledge
The FHA-insured mortgage market share has increased 10-fold since 2006, spawning a huge class of first-time FHA borrowers around the country. FHA mortgages are identical to conventional mortgages in most ways, they're offered as fixed rate or adjustable; they're available with 15- or 30-year terms; and they don't come with prepayment penalties. But, because FHA mortgages are government-insured, FHA homeowners get access to a special, FHA-only program known as the FHA Streamline Refinance.
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FHA Streamline loans can help homeowners lower monthly mortgage payments and interest rates. But what do you need to qualify for an FHA Streamline loan? To begin, you need an existing FHA mortgage—if you don’t have an FHA loan but want to refinance, your options include conventional refinancing or applying for an FHA refinancing loan.
This refinancing option is considered streamlined because it allows you to reduce the interest rate on your current home loan quickly and often times without an appraisal. FHA Streamlined Refinance also cuts down on the amount of paperwork that must be completed by your lender saving you valuable time and money.
FHA Refinancing regulations have been modified to clarify the aspects of some FHA refinance rules and to tighten those rules in other areas. Among the changes are modifications to the Streamline Refinance program–the non-credit qualifying (in most cases) refinancing loan offered by the FHA.
Summarizing the FHA Streamline Refinance:
Perfect 12 month mortgage payment history. This means over the past 12 months you cannot have had one late payment on your mortgage. BUT, that's it we will not look at any other credit history!
Minimum 580 Credit Score
210 Day Waiting Period, FHa requires that borrowers have made 6 mortgage on their current FHa insured loan and that 210 days pass from the most recent closing date of your current FHA mortgage.
Empoyment Verified BUT NOT Income, no pay check stubs, no W2 forms, no income tax returns. But, you must be working and we will verify your employment.
No Appraisal, The FHA isn't concerned about home value -- it's insuring your loan regardless. Therefore, the 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.
Loan Balances Cannot Increase to Cover Loan Costs; FHA prohibits increasing a streamline refinance's loan balance to cover associated loan charges. The loan balance is limited by the formula of Current Principal Balance + Upfront Mortgage Insurance Premium. All other costs, lender fees, title charges, re-establishing a new escrow account must be (1) paid by the borrower, or (2) CREDITED BY THE LOAN OFFICER. This is referred to as a No Cost Refinance and done frequently.
Streamline Refinances Still Require FHA Mortgage Insurance:
Nearly all FHA borrowers make two types of mortgage insurance payments -- upfront, and annual. Upfront mortgage insurance is paid at closing and is equal to 1 percent of the loan size. For example, a $100,000 FHA loan requires a $1,000 upfront mortgage insurance premium (MIP) paid at closing. The FHA adds this insurance payment to your new, starting loan balance by the FHA as part of the Streamline Refi program.
The Good News About Upfront MIP is that it's refundable! If you refinance your current FHA mortgage within its first 36 months a portion of your original Upfront MIP gets credited to your NEW Upfront MIP payment. Since the refund is prorate the sooner you refinance the bigger your refund. See Chart below.
The number requirement for an FHA Streamline Refinance is that there must be a net tangible benefit to the borrower. Without meeting specific tangilbe benefits a lender cannot provide you a Streamline Refinance.
If you have a FHA mortgage and you want to see if you are eligible for a Streamline refinance I will need a couple items; (1) a recent mortgage statement, (2) the Note for your current mortgage, (3) the HUD1 Settlement Statement
With these three item I can determine if you meet the net tangible benefit requirements, calculate your Upfront MIP refund, and get you closed within 30 days!
At USA Mortgage we are getting FHA Streamline Mortgages done that other lenders cannot. Please, contact me today and lets discuss how we can start saving you significantly on your mortgage tomorrow.