July 5, 2011
The FHA Streamline loan program is a refinancing option for FHA borrowers which in most cases allows a no-credit-check refinancing loan.
Changes to the program has modified the terms and conditions of FHA streamline loans, and FHA borrowers who looked into the program in the past should know about the updates in order to make a properly informed decision on when to apply for streamline refinancing.
The FHA breaks down the modified streamline refinancing loan rules into two different categories. The first is for cases assigned on or after 4/18/2011. the second is for cases between 11/17/2009 and 04/17/2011.
The most important details for the new streamline FHA refinancing loan rules affects both categories in the same way. For example, the FHA requires streamline loans the result in a “net tangible benefit to the borrower” which can include lower interest rates, lower monthly payments, or both.
FHA rules now require a minimum time spent in the original FHA mortgage loan before being able to apply for a refinancing loan. This is called a “seasoning period”.
The new seasoning period requirements for FHA mortgages is six months, six payments, and at least 210 days spent paying the original mortgage. The FHA also requires that the six payments (or more depending on the age of the loan) be on time. The rules require an “acceptable payment history” for a borrower to qualify for an FHA streamline refinance loan.
When applying for the refinancing loan, the FHA rules now require the borrower to be paid up for the current month due. That means that the month the streamline loan is approved you may still be required to pay the mortgage bill on the original FHA loan rather than paying under the terms of the refinancing loan.
There are other changes to the FHA streamline loan process, but these are among the major revisions. A complete list of all changes can be found in FHA Mortgagee Letter 11-11: http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/11-11ml.pdf
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.
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