FHA Streamline

It can be an easiest refinance you have ever done. Here is the scoop (requirements):

First - you must have an existing FHA insured loan. HUD implemented some rules to protect the borrowers. One of them “benefit to the borrower” rule - mainly to protect you from “sweet talking” loan officer who is only too eager to talk you in to the loan situation that doesn’t benefit you - the borrower. According to this rule - the new loan should save you at least $50/month from the previous mortgage payment if it is no cost to you refinance. If you bring some money to closing or pay some points - minimum is $75/month to save with the new loan.

***No Appraisal required. If your base loan amount remains the same (no cash-out) - no appraisal will be required. “How about if my mortgage balance is higher than what property is worth… what if I am upside down” - you ask. Well you in luck. Remember - no appraisal required. At the time that I am writing this - big number of properties that were purchased with little or no downpayment in the last few years are in “upside-down” situation. And this is the only way to reduce your interest rate on properties with FHA loan amounts higher than value.  (We not going to get in to Loan Modification discussion here). By the way, maximum cash-out allowed without triggering the appraisal requirement - $500.

***No Income Verification. With this program there is no verification of your employment situation, and income is not one of the conditions for FHA streamline. Exception to this rule is only if any of the borrowers on the old loan change for the refinance. Then income qualification is required.

***No credit qualifying. Credit is not really an issue here. What does that mean? What is being checked is - your mortgage rating, that would reflect late payments on your FHA loan, and FICO score. We as majority of FHA allow only one 30 day late in 12 month period before refinance and 620 minimum FICO score (680 Jumbo loan refinances). Other credit issues are not being looked at. If your situation is more challenging, on a case per case basis (with manual underwriting) we have done streamlines were we don’t look at the lates if the mortgage is current at the time of application and no minimum FICO score.

***No Debt Ratios. Because lender doesn’t look at your credit liabilities and is not concerned with the income - there is no Debt to Income (DTI) ratios to calculate.

***No Seasoning Required. There is no minimum time requirement you should own the property before FHA streamline refinance.

No Face to Face Application. All process can be done remotely, as the paperwork required is reduced to the minimum (streamline - remember). If you have access to email or fax, FedEx or USPS - we can do it.

If you have a second mortgage - streamline refinance allows subordination - so second loan can stay in place while you taking advantage of historic interest rates. That is especially beneficial if you are upside down with your property.

Your newly refinanced loan (like all FHA’s) will be assumable and at low interest rate more attractive to potential buyers who can just assume these loans. It is more of a benefit to sellers of properties with no equity.

*** These guidelines will be subject to change as of November 17, 2009