What is a fha streamline loan?

Answer 1

Quite simply, it's a program developed by FHA to allow FHA mortgage holders to refinance without all of the normal hassles in obtaining a standard or conventional refinance. It's been around for about 25 years and has varied in popularity as much as the Billboard top 20 hits over that same time period. Some of its unique identifiers are as follows:

• No appraisal required. A huge help in today's real estate environment.
• No income qualifications, no debt to income ratios, no paystubs or tax returns. ONLY verification that you do have a source of income.

An FHA streamline loan is a loan that reuses paperwork from your prior FHA loan application in the refinancing process. The FHA reuses your property appraisal unless you ask for a new one. No new income verification is needed unless getting a refinanced loan in your own name, though they will require proof that you have an income of some type. They do not calculate a debt to income ratio. They do not check your credit score.

Streamline loans are faster and cheaper than refinancing with a new mortgage lender. They are also an option for those who are now underwater on their homes, because the old, higher property appraisal is used for the loan. And the purchase price of the home can be used as the appraised value.

There are limits on the FHA streamline loan. You must live in the property or have recently lived there, so you can refinance a home that you've moved out of but cannot sell. You cannot take cash out as part of the streamline refinance. You have to have an FHA mortgage already to use the streamline process. And refinancing costs cannot be added to the loan amount.

To be eligible for the FHA streamlined refinance program, you must have made all house payments on time and in full for at least the past three months. And only one payment to the FHA could be late when they look back at the past twelve months. Furthermore, there cannot be a past due balance on the mortgage. Another limitation on the streamline refinance is that you cannot refinance more than once every nine months. The FHA also requires home owners receive a clear benefit from refinancing, such as lowering the house payment at least 5% per month or getting out of an adjustable rate mortgage.