What is an FHA Streamline Refinance?
The FHA Streamline Refinance program is a great refinance program if you have an existing FHA loan because it allows you to refinance – even if you owe more than your home is worth – with ease.
The FHA refinance program is called a “Streamline Refinance” because it reduces the amount of documentation you are required to provide and it relaxes the underwriting requirements.
- It allows you to to refinance without having to verify your income and assets.
- It has minimal credit requirements.
- An appraisal might not be required.
- It allows for an unlimited loan-to-value ratio, so you can refinance even if you owe more than your home is worth (i.e. you’re underwater).
General FHA Streamline Requirements:
- Your mortgage must already be FHA insured.
- Your mortgage should be current.
- The streamline refinance must benefit you by lowering your payments or converting from an adjustable rate mortgage (ARM) to a fixed-rate.
- No cash out is allowed.
What You Need
It is fairly easy to qualify for an FHA Streamline Refinance, which is a good reason why homeowners consider applying for one.
Here are the things you need to comply before getting your mortgage refinanced:
- 210-day “waiting period”
- 6 mortgage payments on existing FHA loan
- Perfect 3-month payment history
- Net Tangible Benefit or “Purpose”
Waiting Period – From your most recent closing, borrowers should wait for 210 days before they apply for an refinancing. To be eligible for an FHA Streamline Refinance, there should be at least 6 mortgage payments made towards the existing FHA loan.
Payment History – It is important for borrowers to establish at least 3 moths of perfect payment history before applying for refinancing. This means that there should be no recent late payments. Payments are considered late if they are made 30 days after the due date.
Net Tangible Benefit – One can’t just say they need the money they cash out of the refinance for personal reasons to pay bills. Borrowers must provide a legitimate reason for refinancing. One acceptable “purpose” is to reduce components of the mortgage payments by 5%. Switching from Adjustable Rate to Fixed Rate mortgage is also an acceptable Net Tangible Benefit.
What You Don’t Need
Loans backed by the FHA are known to be relatively easy to qualify for because of these things borrowers don’t need to undergo:
- Employment Verification
- Income Verification
- Credit Score Verification
Who is the best FHA lender for a streamline refinance?
Simple. The lender with the lowest interest rate that can get your unique loan scenario approved.
Here at BestFHALender, we can help you find the lender that can do that.