December 9, 2010
For those who have FHA home loans, there’s a refinancing option known as an FHA Streamline Refinancing loan. Streamline loans have far less documentation and paperwork requirements because the initial underwriting has already been done. Qualified FHA borrowers can get Streamline loans for the purpose of lowering monthly mortgage payments and can’t get cash back.
Some FHA borrowers mistakenly believe that “Streamline” refers to more than just paperwork and underwriting, which is why the FHA takes care to point out in the documentation of these FHA refinancing loans that there are closing costs associated with them.
Some banks may offer higher interest rates in exchange for allowing the borrower to build those costs into the loan amount. In these cases the home must have enough equity built up to warrant the higher loan amount.
Regardless of which option is available, closing costs paid up front or financed as part of the new loan, the FHA has a list of guidelines for Streamline Refinancing loans. The borrower must be current on the original loan–delinquent borrowers don’t qualify for an FHA Streamline option. The mortgage must already be FHA insured. Conventional loans don’t qualify for Streamline refinancing but the FHA does offer other refinancing options for non-FHA mortgages.
FHA streamline loans don’t require a new appraisal in many cases, but one is required if the new loan is higher than the original loan. Some FHA loans–investment properties where the borrower doesn’t reside full time in the home–are only qualified for “no-appraisal” Streamline Refinancing, which means the refinanced amount on an investment property will never exceed the original loan amount.
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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