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FHA Streamline Refinance

FHA Streamline Eligibility

FHA home loan programs have the built-in benefit of being able to take advantage of improvements in the market, that would allow you to realize a minimum .50% reduction in the interest rate you're paying on your existing FHA loan.

This program verifies a good payment history over the previous 12 months, and verifies that you are still employed at the time that you are doing the streamline refinance.

What's the Catch?

That's just it - there really isn't one.  There are a couple of things you should be aware of though.

No Cost Streamline - There are minimal costs to doing a FHA streamline refinance that the lender will pay for.  The way the lender pays for these fees is by offering you an interest rate sufficient to cover the cost.

Closing Cost Streamline - If you want to bring in some of your closing costs to escrow, you can possibly achieve an even lower interest rate.  Most lenders like to advertise the no cost option, but I think it's a better idea to know your options, and choose the one that best meets your long and short term goals.

Qualifying for a FHA Streamline Refinance

Paperwork: Different lenders may or may not require all of this paperwork.

  • Loan Application - This is the same application you completed last time you applied for a loan
  • Mortgage payment coupon/statement - Your most recent mortgage statement
  • Homeowner's insurance declaration page or agent's contact information
  • Copy of Driver's License and Social Security Card

FHA Streamline Refinance Special Benefits

  • No Appraisal Required
  • No Income Verification
  • Skip 1 Payment (in most cases)
  • No Cash to Close (in most cases)

The bottom line on this is that there's no cost to explore this opportunity and if you cannot realize at least a .5% improvement in your effective interest rate, FHA will not allow you to refinance.  Win/Win.

FHA Streamline on Investment Property

If you still have a FHA loan on a departed residence that you are now renting out, you may still take advantage of a streamline refinance opportunity.  Same guidelines apply.

Cash Out Refinance

Cash out is not allowed when doing a FHA Streamline Refinance loan.   This loan can only be used to reduce your interest rate or term.  You cannot pay off bills or do home improvements.  You would have to use a traditional FHA home loan, or a Conventional loan if this is your goal.

Removal of Mortgage Insurance

You cannot remove mortgage insurance on a FHA loan. You would need to refinance into a Conventional loan to remove mortgage insurance as long as you have a minimum 20% equity in your home.