FHA Streamline Refinance
The FHA insured mortgage can qualify for an FHA “streamline” refinance. The streamline is a supposedly simplified qualifying process. One of the most important factors for qualifying is the current FHA loan must be current with no late payments in the last 12 months.
If you have that, you need only verify the income to make the payment, and prove that the benefit to the borrower is sufficient.
A portion of the original upfront mortgage insurance is “refunded” or applied to the new upfront mortgage insurance due. Since the new loan term is beginning again, the insurance fee is “re-upped”, there will be an increase in the loan amount, but as usual in the FHA loan will allow this fee to be automatically financed into the new loan balance along with any other lender and title fees.
There are two kinds of FHA streamline refinances:
- that requires an appraisal, and allows for 97.25% of the appraised value
- that DOES NOT require an appraisal. The “no-appraisal” FHA streamline is limited only to the existing loan payoff plus the new Mortgage insurance. Any additional loan and title fees must be paid out of pocket.
The no-appraisal FHA streamline is a great way to get some relief if a borrower is underwater with their equity.
