The FHA streamline is a refinance program that allows borrowers to refinance an existing FHA loan with less documentation compared to the amount of paperwork involved when applying for the original FHA mortgage. HARP is the acronym for Home Affordable Refinance Program and has only been around for a few years while the FHA streamline has been a staple in the industry for quite some time but both the FHA streamline and HARP address the same issue: refinancing an existing mortgage when property valuations, credit or income is an issue.

For those with a conventional mortgage, one that is underwritten to guidelines prepared by Fannie Mae and Freddie Mac, a refinance requires at least a 10% equity position. The loan cannot exceed 90% of the current market value of the property. When property values fall below what is owed on the home, the borrower must either bring money to the table to lower the loan amount in order to refinance. But millions of borrowers found themselves in that very situation and couldn’t refinance to a lower rate because they had no equity. HARP was originally introduced in 2009 then revised in 2011 to address this issue.

As long as an existing loan is owned by Fannie or Freddie, there is no need for a property appraisal. That means there is no need for at least a 10% equity position. The borrowers can be “upside down” on the mortgage and still qualify.  There is no minimum credit score required on a HARP loan. The goal is to lower a borrower’s monthly payment, freeing up income.

The FHA streamline is very similar to the HARP program and doesn’t require an appraisal, credit score or income verification. It’s a very straightforward, simple process. The only real guideline is the loan to be refinanced must be an existing FHA mortgage. And for both HARP and the FHA loan, there can be no cash out taken during the transaction.

There are other guidelines you’ll need to be aware of and your lender and walk you through them but both programs are extremely easy to qualify for and can be answer to those who want to refinance but don’t think they can. If this is your or you know someone who might benefit from these loan programs, you need to call a lender who can answer your questions. If you have a conventional or FHA loan, a lower monthly payment just might be in your future.

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