The FHA Streamline is a mortgage option available to people who have existing FHA loans. The purpose, as the name suggests, is to help homeowners service the existing FHA mortgage. It comes in handy as it has flexed restrictions and is an advantage to the FHA borrowers. It is advisable that, if you have an existing FHA loan, you would rather go for the FHA Streamline to refinance your mortgage rather than go for any other form of loan. Due to the high demand for the loans, guidelines and rules keep changing by day it seems to improve the terms. The main objective of the FHA is to allow, as many people be able to get cheap loans to finance their homeownership arrangements. Today, we look at the FHA Streamline Refinance guidelines for 2017. This will help us note the changes that have been made and give us the most updated information to help us make sound decisions. We tackle this by analyzing the guidelines one by one.
FHA Streamline Refinance Guidelines
It is a unique mortgage option available to FHA mortgage homeowners. It is important to note that, the FHA does not give the loans, but only guarantees the loans. Therefore, even for the FHA Streamline, a homeowner is only offered guarantee, then seeks the loan from private lenders.
FHA Streamline Refinance Lenders
Home appraisal
The FHA Streamline Refinance Program does not require a home appraisal to determine the new value of your home, on which it will base the decision whether or not to approve you for the refinance. Therefore, the FHA will refinance you based on the initial value of your home when you were taking up the FHA loan. This is one of the many FHA Streamline benefits. Normally, any loan terms will be based on the existing value of the home but with FHA Streamline appraisal waiver, the terms almost remains the same as the existing FHA loan terms. It becomes more of an additional FHA loan, which is an advantage to the homeowner.
FHA Streamline Refinance rates
The FHA Streamline Refinance mortgage rates remain the same as the rates for the existing FHA loan. The fact that the Refinance program is treated as a by-product of the FHA loan makes the rates remain the same. In addition, there is no home appraisal before being approved for the FHA Streamline Refinance loan; therefore, all the new loan terms will be based on the same value, as the previous loans, which make the terms, remain the same. However, since private lenders offer the loans, different terms apply. It is important also to note that, the loans come with fixed rate or adjustable rate mortgage packages.
Job, Income and Credit verification
For almost all credit facilities available in the market today, due diligence to verify ability to service and pay the loan as agreed is the most important issue of concern. FHA Streamline Refinance however, does not really go through all these verification so as to determine whether or not you will be approved for the loan. The FHA Refinance bases the approval on the mere fact that you are an existing FHA homeowner. This makes the process very easy and simple. In addition, it makes it possible for all FHA homeowners to get approved for cheap refinance mortgages regardless of their current financial position.
FHA loan 3-month payment history
Despite that financial verification is not done to determine approval, the FHA Streamline Refinance program requires a clean and perfect history of the existing FHA loan payment dating back 3 months. The refinance is almost like a reward in a sense for having good payment history. Only one mortgage late pay is technically allowed to still be eligible.
Loan balance limit
The FHA Streamline Refinance program requires that the Refinance loan balance should not at any one-time cover associated loan charges. The new loan amount is thus limited, putting a restriction to the maximum amount of money that can be borrowed as a Refinance. The new loan balance is determined by the amount of current loan principal and the upfront mortgage insurance premium (MIP).
Credit Score verification
The FHA Streamline Refinance program does not use and verify credit scores along the approval process. This comes as good news to borrowers who have poor credit scores, even below 500. The program bases its decision on payment history of the existing FHA loan.
210 Day waiting period between Refinance
The FHA requires borrowers to have made consistent mortgage payments on the existing FHA loans and allow a minimum of 7 months (or 210 days) to pass from the day of the last closing date in order to be approved for the Refinance program.
This means that, if you want to apply for the FHA Streamline Refinance loan, you must be aware and start planning and taking the necessary actions.
The FHA to the FHA beneficiaries enforces these FHA Streamline Refinance guidelines. However, since the FHA is only a guarantor and not a lender, different credit providers have different reactions to these guidelines. Some do not comply fully with the guidelines based on their set standard guidelines. At the end of the day, the essence of the refinance is to bring the combined rate down. The FHA will consider this in the approval process.
If you find that a lender does not comply with these user-friendly guidelines it is advisable that you check and try out different mortgage lenders, because quite honestly there are a ton in the market. These guidelines apply for 2017 but they are bound to change with time. Therefore, always seek information to get to understand when anything concerning the FHA Streamline Refinance guidelines.
