The New FHA Streamline Program

The FHA mortgage program is easily the most popular for the first time home buyer set. Why? Because the loan only requires a down payment of 3.50 percent making it easier to save up enough cash to close. FHA loans also carry a government guarantee which lenders appreciate as well. As long as the loan was approved using standard FHA guidelines, should the loan ever go into default, the lender is compensated for the loss. This guarantee is financed by mortgage insurance premiums paid by the borrower. And one other special feature of FHA loans applies to refinancing, called the FHA Streamline refinance and with recent changes to the mortgage insurance premiums, the program is even more attractive.
It’s relatively easy to determine whether or not a refinance is a good move. By speaking with a loan officer, compare the amount of interest saved along with monthly payments with the amount of closing costs required on the loan. However, even if a refinance does make sense, without sufficient equity in the home, a refinance isn’t possible. That is, unless you have an FHA loan.

The FHA streamline refinance loan requires very little documentation. How little? How about:
  •      No employment verification
  •       No income verification
  •        No credit scores required
  •       No appraisal needed

You read that right. Even if you’re upside down on your property and owe more than what the property is worth, you may still be eligible for an FHA streamline as long as your lender can document a tangible benefit such as lowering a monthly payment by at least 5.00 percent or switching from an adjustable rate loan to a fixed. There are other requirements so it’s important to first speak with your lender. For example, closing costs cannot be rolled into the loan with a streamline.
And while lowering your monthly payment, FHA has also reduced the mortgage insurance premiums as well. For loans endorsed before June 1, 2009, the upfront mortgage insurance premium (the one you roll into your loan) is a scant 0.01 percent and the annual premium paid monthly is 0.55 percent of the loan amount. For FHA loans endorsed after June 1, 2009, the upfront premium is 1.75 percent of the loan amount and the annual premium paid monthly ranges from 0.45 percent to 0.85 percent, depending upon the loan term and loan-to-value.

There are more details you need to know about to see if this program is a good fit but if you meet the criteria and your lender can document a true benefit from refinancing your existing FHA loan, this will quite possibly be the easiest mortgage process you’ve ever experienced.

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