July 24, 2013
A reader asks, “In regard to not all FHA streamline loans require a new credit check. What is the criteria required for FHA loans that do not require a credit check and/or appraisal?”
FHA new purchase home loans do require a credit check and an appraisal, as do all FHA cash-out refinance and Home Equity Conversion Mortgages or HECM loans.
There is no such thing as a no-credit check FHA loan for a new purchase transaction or for any transaction that includes cash back to the borrower that is not in the form of a bona fide refund. Certain exceptions may be possible for FHA energy efficient add-ons for a Streamline Refinance loan, depending on the circumstances.
The FHA Interest Rate Reduction Refinance Loan or Streamline Refinancing loan is the ONLY FHA loan product that has no FHA-required credit check in most cases, and no FHA-required appraisal. These refinance loans are only for existing FHA mortgages and cannot be used to refinance a conventional or other non-FHA mortgage.
Borrowers should also know that the no-credit check/no appraisal feature is an FHA option for these types of loans and the lender is free to require–and may well require–a new credit check and/or appraisal for these loans.
The fact that the FHA does not require a credit report or appraisal for FHA Streamline Refinancing does not obligate the lender to do the same.
Loan approval criteria for Streamline Refinancing is based on the borrower’s original mortgage loan application, but the new loan is reviewed carefully to insure that lower interest or mortgage payments are the result of the new loan (unless the old loan being refinanced is an Adjustable Rate Mortgage). A borrower who applies for this type of refinancing but finds his or her payments going up 20% or more as a result of the new loan will be required to get a new credit check.
For more information on no-credit check FHA refinance loans, speak to a loan officer about options and policies.
Do you have questions about FHA home loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
Browse by Date: