Reduced Requirements and Fees for the FHA Streamline Refinance
By: Rosemary Rugnetta | October 18th, 2012
One of the popular benefits of having an FHA loan is the ability to refinance through the FHA streamline refinance program. This mortgage is truly an easy and quick way to trade in a current FHA mortgage for lower mortgage rates. By doing so, it is most likely that homeowners will see a savings on their monthly mortgage payments.
Without much effort, borrowers are able to obtain the FHA streamline which has very little underwriting, thus, a faster process. Of course, as is with all mortgage programs, there are some eligibility requirements that borrowers must meet. For starters, the loan being refinanced must be an existing FHA loan since all FHA loans are eligible for this program with no cash out. FHA has recently enhanced the streamline program for certain mortgages. For existing loans that were FHA endorsed prior to June 1, 2009, FHA has reduced the upfront mortgage insurance premium to .01% and the annual mortgage insurance premium to .55%.
FHA requires that to be eligible, the mortgage can not be delinquent. This program is not for borrowers who are having a difficult time making mortgage payments. It is more of a reward for those who have been faithful with making their mortgage payments regardless of their situation. In fact, to be eligible, there must be no late payments for the past twelve months. Once the application is made, the loan results must also show a “net tangible benefit” of at least 5%. This means that the new mortgage payment must be a minimum of 5% lower than the original mortgage.
With this streamline program, borrowers are not subject to credit approval. In addition, verification of income and employment are also not necessary. This alone makes the FHA streamline the perfect refinance for homeowners who have experienced a reduction in income or who are currently receiving unemployment benefits. The FHA streamline also does not require an appraisal for LTV ratios. Underwater borrowers will find that this makes the FHA streamline refinance an attractive means of trading their current mortgage for lower mortgage rates no matter how much they owe or how much their home is worth.
It is important to know that these guidelines for the FHA streamline refinance with reduced fees are strictly for no cash out mortgages. This opportunity is open for primary residences, investment properties, condominiums and second homes, all of which must have existing FHA loans that meet the eligibility requirements and qualification guidelines.
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