What Is An FHA Streamline Refinance?

The FHA Streamline Refinance is a low document, no appraisal refinance program for Atlanta homeowner's with exisiting FHA mortgages.

If you have a conventional mortgage, USDA, VA or anything else you are out of luck (kinda). There are other refinance loans for Atlanta homeowner's with those products, the FHA Streamline is not one of them.

FHA Streamline Refinances offer several advantages over a traditional refinance

• NO Appraisal
• VERY Little Documentation Needed
• No Equity Needed
• Quick Turn-times 

FHA does not care if you are underwater on your mortgage. Seriously, upside-down, underwater, does not matter on a FHA Streamline Refinance

With 300,000 Atlanta homeowners underwater, FHA Streamlines can be a huge part of creating more savings for homeowners.

When homeowners save they typically use those savings for consumer goods or plow them into their small businessed. Spending creates jobs and jobs help the entire economy.

Beyond the "no appraisal" part, though, an FHA Streamline Refinance mortgages is similar to most other loan products. It's available as fixed rate or adjustable mortgage; it comes with 15- or 30-year terms; and there's no prepayment penalty to worry about.

FHA Streamline : Little to No Documentation Needed

In some recent guideline changes FHA reduced verification for practically everything on an FHA Streamline Refinance mortgage application. We all like easy.

To understand why the FHA Streamline Refinance is a smart program for the FHA, we have to remember that the FHA's chief role is to insure mortgages -- not "make" them.

Therefore, it's in the FHA's best interest to help as many people as possible qualify for today's low mortgage rates. Lower mortgage rates means lower monthly payments which, in theory, leads to fewer foreclosures.

Fewer foreclosure is good for homeowners, good for Atlanta neighborhoods, good for housing values and good for the economy as a whole.

By easing the qualifications needed, FHA just increased the stability of the entire portfolio of loans they insure.

Are You FHA Streamline Refinance Eligible?

Although the documentation and streamline qualification guidelines are much less strict that a traditional refinance, there are still a few criteria you need to meet

Perfect, 12-Month Payment History Is Required

The FHA's main goal is to reduce its overall loan pool risk. Therefore, it's number one qualification standard is that homeowners using the Streamline Refinance program must have a perfect payment history stretching back 12 months. 30-day, 60-day, and 90-day lates are not allowed. Furthermore, loans must be current at the time of closing.

210-Day "Waiting Period" Between Refinances

The FHA requires that borrowers make 6 mortgage payments on their current FHA-insured loan, and that 210 days pass from the most recent closing date, in order to be eligible for a Streamline Refinance.

Employment And Income Are Not Verified

The FHA does not require verification of a borrower's employment or annual income as part of the FHA Streamline process. There is no Verification of Employment, nor are there paystubs, W-2s or tax returns required for approval. 

The Refinance Must Have "Purpose"

Streamline Refinance applicants must demonstrate that there's a Net Tangible Benefit in the refinance; a legitimate reason for refinancing. Loosely, Net Tangible Benefit is defined as reducing the (principal + interest + mortgage insurance) component of the mortgage payment by 5 percent or more.  Refinancing from an ARM into a fixed rate loan is an automatic Net Tangible Benefit. Taking "cash out" to pay bills is not an allowable Net Tangible Benefit.

Loan Balances May Not Increase To Cover Loan Costs

FHA prohibits increasing a Streamline Refinance's loan balance to cover associated loan charges. All costs -- origination charges, title charges, escrow population -- must be either paid for by the borrower out of pocket or paid for by the lender through a lender credit.

The latter is referred to as a NO COST STREAMLINE REFINANCE. The no cost option is the favorite of the majority of my Atlanta FHA Streamline borrowers. One note, the no cost option is only available with a slightly higher interest rate. Typically, 1/4 higher than the borrower paid option.

Appraisals Not Required

The FHA isn't concerned about home value -- it's insuring your loan regardless. Therefore, the FHA does not require appraisals for its Streamline Refinance program. Instead, it uses the original purchase price of your home, or the most recent appraised value, as its valuation point. Homes that are underwater are still FHA Streamline-eligible.

FHA Streamline Refinance Mortgage Insurance

The FHA Streamline Refinance, like all FHA loans, has mortgage insurance. Two types actually. Borrowers will have 1% of the loan balance FINANCED onto the top of the loan. You will also pay monthly mortgage insurance for a minimum of 60 months and a maximum of 10 years.

Loan to value is, for the most part, not a factor in FHA mortgage insurance.

The good news about Upfront MIP is that you can get a refund on it. If you refinance your FHA mortgage during its first 36 months, a portion of your original Upfront MIP gets credited to yournew Upfront MIP payment. 

With the FHA Streamline Refinance, the sooner you refinance, the bigger your MIP refund.

The other type of FHA mortgage insurance -- annual MIP -- is ongoing mortgage insurance included with your monthly mortgage payment. 

The FHA charges annual mortgage insurance according to the schedule below:

• 15-year loan terms, over 90% loan-to-value : 0.50% MIP
• 15-year loan terms, under 90% loan-to-value : 0.25% MIP
• 30-year loan terms, over 95% loan-to-value : 1.15% MIP
• 30-year loan terms, under 95% loan-to-value : 1.10% MIP

Note that mortgage insurance payments are included in the FHA's Net Tangible Benefit requirement. You must lower your monthly payment by at 5 percent to qualify for the FHA Streamline Refinance.

The FHA Streamline Refinance is among the easiest and best-valued mortgage products available.

Apply Now

Return to Loan Options