Articles in Category: Streamline Refinance

What happens to my FHA loan in a natural disaster?

April 29, 2015

FHA Streamline Refinance Loans: A Reader Question

A reader asks, “If I need to refinance to remove my ex-husband from my mortgage loan, and he has already signed the quit-claim and put the mortgage in my name only. Do I have to meet the normal 5% payment reduction requirement for the Net Tangible Benefit?” The borrower does not specify whether the refinance loan is an FHA Streamline Refinance loan or a cash out loan, but since this comment was on a post we did on FHA Streamline refinance loans, we’ll assume that’s the loan being asked about. FHA Streamline loans do require a “net tangible benefit” to the borrower as described in HUD 4155.1. That benefit could be a lower monthly payment, lower interest rates, or the fact that the borrower is refinancing from an Adjustable Rate | more...

April 13, 2015

FHA Streamline Refinance Loan Applications: A Reader Question

By Joe Wallace

A reader asked us a question recently about applying for a refinance loan. “Do I mark “YES” on “Credit qualifying Streamline”?” The term, “credit qualifying streamline” refers in this case to an FHA streamline refinance loan that requires a credit check. HUD 4155.1 states the following about credit qualifying: “The purpose of the mortgage credit analysis is to determine − a borrower’s credit performance − a borrower’s capacity to repay the mortgage, and − whether or not the borrower has sufficient funds to close, and – limit collection actions or foreclosure. ” Furthermore, as part of this process, HUD 4155.1 states: “The lender must • verify the borrower’s identity, and • ask sufficient questions of the borrower to get a complete picture of the − borrower’s financial position − source | more...

March 14, 2014

FHA Streamline Refinance Loan Maximums

By Joe Wallace

If you want to refinance your existing FHA home loan with an FHA Streamline Refinance loan, you likely want to know what the maximum loan amount would be for the transaction. Borrowers who apply for Streamline Refinance loans are often able to do so with no credit check or appraisal (depending on the lender) and there’s no cash back to the borrower for this type of refinance loan. The maximum FHA loan for Streamline Refinance transactions may depend on whether you have a lender-required appraisal or not. According to HUD 4155.1, the maximum FHA mortgage loan for Streamlines without an appraisal are 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 | more...

March 7, 2014

FHA Streamline Refinancing Loans Net Tangible Benefit Table

By Joe Wallace

Recently we wrote about the requirements for FHA streamline refinance loans to have a “net tangible benefit” to the borrower. The type of benefits mentioned in the FHA loan rulebook for streamline loans (in general) include a lower interest rate and/or monthly payment for the borrower. The purpose of an FHA streamline refinance loan is to help a home owner with an existing FHA mortgage get into a more affordable mortgage loan payment without an FHA required credit check or appraisal. (The lender may require one anyway.) Since there are many different types of FHA loans available, the net tangible benefit for the borrower may be different depending on the kind of loan being refinanced. The FHA has a table showing all the requirements for the different types of loans | more...

March 7, 2014

FHA Streamline Refinancing: “Net Tangible Benefits”

By Joe Wallace

Recently we posted about FHA streamline refinance loan options. FHA streamline loans are for existing FHA mortgages and feature no money back to the borrower. That means there is no FHA-required credit check or appraisal, though the lender may require one. FHA Streamline Refinancing rules as printed in HUD 4155.1 state that in most cases an FHA streamline refinance must result in a “net tangible benefit” to the borrower. What does this mean and how can a borrower know what those benefits will be? HUD 4155.1 Chapter Six says, “The lender must determine that there is a net tangible benefit to the borrower as a result of the streamline refinance transaction, with or without an appraisal. Net tangible benefit is defined as • a 5% reduction to the principal and | more...

March 6, 2014

FHA Streamline Refinances–What’s Possible?

By Joe Wallace

FHA Streamline refinancing loans are for existing FHA mortgages. They feature no FHA-required appraisal in most cases, and there is no FHA-required credit check in most cases. Some borrowers who want to apply for this type of FHA refinance loan may wonder if the transaction they have in mind is possible under the rules of the FHA loan program. For example, some borrowers want to refinance from a conventional mortgage to an FHA refinance, which is not possible under the FHA Streamline program (but is under FHA Cash-Out Refinancing). What transactions ARE permitted? According to HUD 4155.1, Chapter Six, Section C under the heading “Types Of Permissible Streamline Refinances” we find a list of the following: • no cost refinances • ARM to ARM refinancing • ARM to fixed rate | more...

September 11, 2013

FHA Loan Rules Updated: Maximum Loan Amounts For Streamline Refinancing

By Joe Wallace

The FHA and HUD have updated some of the rules used to calculate maximum mortgage loan amounts for FHA Streamline Refinancing loans. According to Mortgagee Letter 2013-29, there are new guidelines to lenders on how the maximum amount is calculated, and what can be included in the loan amount when calculating the mortgage amount. “Mortgagees are reminded that when processing an FHA-insured streamline refinance mortgage, the new maximum mortgage amount must always be calculated starting with the outstanding principal balance on the existing mortgage, not with the payoff amount for the existing mortgage.” Borrowers should know the difference between the outstanding balance and the payoff amount. According to the Consumer Financial Protection Bureau (CFPB) official site, “Your payoff amount is how much you will actually have to pay to satisfy | more...

July 24, 2013

“No Credit Check” FHA Loans: A Reader Question

By Joe Wallace

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 | more...

July 17, 2013

FHA Streamline Refinance Loans: Adding or Deleting Borrowers To The Title

By Joe Wallace

When borrowers with existing FHA mortgages want to apply for streamline refinancing, one question that sometimes comes up is whether or not a borrower is permitted to add or delete someone from the title of the loan at the time of refinancing. FHA loan rules do address this issue. Those rules are found in HUD 4155.1, Chapter Six, Section C under a section titled Borrower Additions or Deletions to the Title on a Streamline Refinance. The concern for some borrowers is whether or not adding or deleting someone might trigger the due-on-sale clause making the entire loan amount payable according to the terms of the clause. The FHA does permit additions and deletions to the title as described in Chapter Six: “Individuals may be added to the title on a | more...

July 17, 2013

Credit Qualifying FHA Streamline Refinances

By Joe Wallace

FHA Streamline Refinances are designed to lower a borrower’s monthly payments and/or get a lower interest rate. For many borrowers this is a no-appraisal/no new credit application type of loan. But in some cases, a borrower’s payments may actually increase with a streamline refinance loan depending on whether permitted add-ons are included in the loan amount. In cases where the payments increase to 20% or more, there is a credit-qualifying requirement for the new loan. This requirement is found in the FHA loan rules for Streamline Refinancing loans, which say: “A credit qualifying streamline refinance must be considered when a change in the mortgage term will result in an increase in the mortgage payment of more than 20% when deletion of a borrower or borrowers will trigger the due-on-sale clause | more...