Articles in Category: Streamline Refinance

July 16, 2013

FHA Streamline Refinances: Does The FHA Require An Appraisal?

Borrowers who apply for FHA home loans to buy their dream home have to have that property appraised as a part of the loan process. The appraisal helps insure the property lives up to FHA minimum standards and establishes the fair market value of the property. When it’s time to refinance, depending on the lender and the type of refinance loan you may be required to get a new appraisal–FHA cash-out refinancing, for example. In order to determine the loan amount, the current market value of the property is required. But what about refinancing that has no cash back to the borrower and is only intended for a lower interest rate or monthly payment? The FHA refinance loan program known as Streamline Refinancing, for example, which does just that. A | more...

July 11, 2013

FHA Streamline Refinance Loans With Appraisals

By Joe Wallace

FHA refinancing loans include something known as a Streamline Refinance option; the FHA Streamline Refinance allows a borrower with an existing FHA mortgage to apply for refinancing to lower mortgage rates or monthly payments. No cash back is permitted and no FHA-required credit qualifying is needed. Additionally, FHA Streamline loans have no FHA-required appraisal. But what about situations where there IS an appraisal with an FHA Streamline Refinance? FHA loan rules for no-appraisal streamline loans describe the maximum loan amount as follows: “The maximum insurable mortgage for streamline refinances without an appraisal cannot exceed the outstanding principal balance • minus the applicable refund of the UFMIP, • plus the new UFMIP that will be charged on the refinance. Note: The outstanding principal balance may include interest charged by the servicing | more...

June 27, 2013

FHA Loan Questions: Seasoning Periods On FHA Streamline Refinance Loans

By Joe Wallace

A reader asks, “Is there a cutoff date for when the original mortgage (FHA) was started? I have been getting letters that I am prequalified and I finally called one lender today. After giving them all of my information so they could check my credit, they said I was not in the house long enough. From the info on this website and the FHA website I don’t see anything about the length of time.” The FHA issued guidance on this issue in 2011 with Mortgagee Letter 2011-11, which was a policy update on a variety of requirements for FHA refinance loan transactions in general, but specifically addressing issues such as the “seasoning period” for FHA loans before a borrower can apply for FHA refinancing. According to FHA Mortgagee Letter 2011-11, | more...

May 13, 2013

FHA Energy Efficient Mortgage Rules For Streamline Refinance Loans

By Joe Wallace

The FHA Energy-Efficient Mortgage (EEM) option is available for borrowers who want to apply for additional money to be used for energy-efficient upgrades on the home being purchased or refinanced with an FHA mortgage. An FHA EEM is subject to certain rules and requirements, especially when paired with a Streamline Refinance. For example, one of the requirements of a Streamline Loan is that the borrower must get a benefit from the refinance–usually in the form of lower interest or monthly payments. But with some FHA EEMs, the payments may actually go up. Is this permitted under the rules? HUD 4155.1 spells out when those higher payments may be allowed–the guidence is found in Chapter Six, Section D. Under “Streamline Refinance Transactions with EEM” where you’ll find the following: “For a | more...

April 4, 2013

FHA Loan Refinance Credit Rules: A Reader Question

By Joe Wallace

A reader asks, “I am trying to refinance my FHA loan with my current lender. I was refused they said, because my credit score is too low. I thought this did not matter? I thought the FHA STREAMLINE was intended for situations like ours.” “I have never been late or missed a payment in 4.5 years. My husband is doing well now and we are trying to get back to normal. Does the credit score count against you or not on the FHA streamline? And do the banks have a right to refuse the streamline if you are eligible?” There are several factors that must be considered when looking at a question like this. It’s true that FHA Streamline loans have no FHA requirement for credit underwriting which would include | more...

March 28, 2013

FHA Streamline Refinance Loans: Rules You Should Know

By Joe Wallace

FHA streamline refinance loans allow a borrower who has an existing FHA mortgage to refinance with no FHA-required credit check or FHA-required appraisal. FHA streamline loans work on the concept that the borrower has already qualified for the original FHA loan, so that qualifying data is used to get the home owner into the streamline refinance loan. These loans have certain rules that apply which don’t necessarily apply to other types of refinancing. For example, the purpose of the loan can come under scrutiny–the borrower must, in most cases, get a reduced mortgage payment or interest rate as a result of the new loan. Additionally, FHA loan rules state: “A transaction for the purpose of reducing the mortgage term must be underwritten and closed as a rate and term | more...

February 21, 2013

FHA Refinance Loan Questions: Credit Requirements

By Joe Wallace

A reader asks, “My divorce was final last March. My ex got the house. He’s suppose to be getting it refinanced but has been turned down twice for the Streamline. What are we missing? It was “transferred” to him through divorce, he has all documents showing he’s made the payments since we bought the house 5 years ago to present. And what’s the “non-credit” qualifying requirement? From what I’ve read, he should be good to go with that but the lenders, or lack thereof, keep turning him down due to debt/income ratio.” Reader questions like these are common; unfortunately there are too many variables that could affect a refinance loan application to answer this reader’s query specifically. What variables could be at work in situations like these? Any number of | more...

January 10, 2013

FHA Streamline Refinance Loans Without An Appraisal

By Joe Wallace

FHA Streamline loans are described in the official rules (HUD 4155.1) as follows: “Streamline refinances • are designed to lower the monthly principal and interest payments on a current FHA-insured mortgage, and • must involve no cash back to the borrower, except for minor adjustments at closing, not to exceed $500.” The no-cash-out rule makes FHA Streamline Refinance loans different than cash-out refinances. Streamline loans may be done with or without an appraisal. According to FHA loan rules, when a Streamline Refinance is done without an appraisal, the following applies: “Generally, the streamline refinance mortgage amount may never exceed the statutory limits, except by the amount of any new upfront mortgage insurance premium (UFMIP). However, the maximum mortgage may exceed the statutory limits on certain specialty products.” Additionally, there are | more...

December 31, 2012

FHA Streamline Refinance Loans: Lower Interest and/or Mortgage Payments

By Joe Wallace

With interest rates at lows not seen in many years, many FHA borrowers are considering refinancing their existing FHA home loan even if they have previously refinanced in the last few years. While some consider the term “serial refinancing” to be negative, this practice is in vogue once more as many rush to get better interest rates than they had access to when they first applied for a mortgage loan. Refinancing is especially popular at present due to concerns over the “fiscal cliff” and its potential to affect the average person’s bottom line through higher income taxes, the possible reduction or elimination of certain tax breaks including the mortgage interest deduction. Is now the right time to pre-qualify for an FHA refinance loan or apply for FHA streamline refinancing? That’s | more...

December 7, 2012

FHA Refinance Loan Options

By Joe Wallace

Recent news headlines related to “fiscal cliff” include warnings of possible tax hikes, a loss of (or cap on) mortgage loan interest rate tax breaks and other bad-news type possibilities. Those headlines make some homeowners seriously think about refinancing their FHA mortgages–getting into lower interest rates and/or lower payments to offset the higher costs of owning a home should the fiscal cliff issue enter a worst-case scenario. While no homeowner should rush into such a decision, those who are ready to commit should know their FHA refinance loan options. According to the FHA official site, borrowers with FHA or conventional home loans have the following choices as described in HUD 4155.1 Chapter Three: “FHA insures several different types of refinance transactions, including –Streamline refinances of existing FHA-insured mortgages made with | more...