January 13, 2011
FHA Refinancing loans are more popular than ever thanks to the need many homeowners have to lower interest rates and monthly payments. Non-cash out refinancing includes both Streamline and non-Streamline FHA loans. Each one has its own restrictions and requirements.
As with all FHA refinancing loans, the FHA does not require the borrower to pay the current month’s mortgage payment prior to closing the loan. The FHA adds, “nor will be the principal balance of the existing loan be reduced by the amount of that unpaid principal.”
FHA Streamline Refinancing rules are fairly simple on the surface–the buyer applies for refinancing that does not offer any cash proceeds from the loan. That said, the FHA does make exceptions for “minor adjustments at closing not to exceed $500.” FHA rules say Streamline Refinancing is intended for “the refinance of the FHA insured first mortgage only. This type of loan is designed to lower the monthly principal and interest payments on the current FHA insured mortgage.”
FHA Streamline Refinancing does not require an appraisal on the FHA level, but the individual lender may ask for one depending on the circumstances.
For non-streamline FHA refinancing with no cash out, there are two ways to determine the maximum refinancing loan amount. FHA requirements state the lender must use the lesser of the two calculations. The FHA describes the first calculation as
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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