July 22, 2015
If you have an existing FHA mortgage loan, you can apply for a refinance loan with no FHA required credit check or appraisal that results in a reduction in your monthly mortgage payment and/or interest rate in most cases. Called the FHA Streamline Refinance loan, these loans are only for existing FHA mortgages and offer no cash back to the borrower. FHA loan rules permit Streamline loans for those who have assumed FHA mortgages.
According to the FHA official site (www.fha.gov), the FHA, “does not require an appraisal on a streamline refinance. These transactions can be made with or without an appraisal.”
If there is a lender required appraisal, there may be corrections noted. According to FHA loan rules, these corrections may or may not need to be made as a condition of loan approval depending on circumstance: “FHA does not require repairs to be completed on streamline refinances with appraisals, with the exception of lead-based paint repairs. However, the lender may require completion of repairs as a condition of the loan.”
In some cases, a credit check is either required by the lender or when a Streamline Loan that would otherwise not require one exceeds certain parameters set by the FHA.
“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
–following the assumption of a mortgage that occurred less than six months previously, and does not contain restrictions (i.e. due-on-sale clause) limiting assumption only to a creditworthy borrower, or
–following the assumption of a mortgage that occurred less than six months previously, and did not trigger the transferability restriction (that is, the due-on-sale clause), such as in a property transfer resulting from a divorce decree or by devise or descent.”
If you have an existing FHA loan and are interested in an FHA Streamline Refinance loan, discuss your needs with a loan officer. Remember that FHA Streamline loans must normally result in either a lower mortgage payment, a lower interest rate or some other “tangible benefit” to the borrower.
That tangible benefit may also be moving into a fixed rate loan out of an adjustable rate mortgage. FHA Energy Efficient Mortgages are also an option with Streamline Loans–you can add several thousands of dollars to the loan amount for FHA-approved upgrades and repairs to a residence to make it more energy efficient.
Do you have questions about FHA mortgages or refinance 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.
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