FHA Mortgages
Home » Using FHA to Refinance


FHA Streamline Refinancing

 

The FHA streamline refinancing has become and increasingly attractive option for FHA mortgage holders. It has been in effect since the 1980s for insured mortgages and those who want to refinance for a number of reasons. "Streamline" refers to the reduced amount of paperwork and approval processes needed to receive refinancing on a current FHA mortgage. There are two types of FHA streamline refinances: without appraisal and with appraisal.

FHA Streamline Refinancing: Without Appraisal

This type of FHA refinancing is for those who wish to refinance to obtain a lower interest rate and do not wish to take cash out of their home’s equity. Without appraisal means that there are no appraisals needed on the property to establish value, and no credit evaluations needed to approve the mortgage. The FHA streamline refinancing without approval can eliminate the need to re-qualify because of credit history. However, you will need to reestablish your escrow accounts when you settle the mortgage.

Terms of a streamline refinance are:

  • The mortgage that you would like to refinance should already be a FHA-approved mortgage.
  • Cash cannot be withdrawn from equity when using the streamline without appraisal option.
  • Refinancing should be for the purpose of lowering monthly principal and interest payments only.
  • Mortgage payments must be current, and a 12-month mortgage payment history will be assessed to make sure that no payments have been late.
  • No income, asset, or employment verifications are needed to qualify.

Companies are able to offer streamline refinancing in a variety of ways. Some companies advertise "no cost" refinancing, which means no out-of-pocket fees are required to take out a new mortgage. These fees, which typically include mortgage origination fees and closing costs, can be financed into the mortgage if the mortgage amount does not exceed the amount of the original mortgage. Some lenders may require closing costs to be paid when the mortgage is refinanced, which can result in a lower monthly payment, on interest and principals.


FHA Streamline Refinancing: With Appraisal

FHA streamline refinancing with appraisal is similar to that without appraisal, except that it is for homeowners who wish to receive cash from their home’s equity. The other difference between the two is that financing with appraisal requires an appraisal assessment of the property being refinanced, and re-qualification for the mortgage is necessary. Credit, employment, and income requirements will be reassessed upon refinancing with a streamlined, with appraisal mortgage. When you take out a FHA streamline refinance mortgage with appraisal, all closing costs can be refinanced.

Certain standards must be met to refinance with a FHA streamline mortgage. You may be able to refinance without appraisal unless you transition from an adjustable-rate mortgage to a fixed-rate mortgage and the new payment is higher. However, if your new payments will be higher than the previous payments, you will need to refinance with appraisal and undergo all necessary credit, employment, and income verifications. Verifications will also be needed if you refinance to remove a borrower from the previous mortgage, or if you assumed the mortgage without previous credit qualifications within a time period of 6 months.


Why Use FHA Streamline Refinancing?

FHA Streamline Refinancing is a quick and easy way to take advantage of lower interest rates or lower your monthly payments. FHA mortgage qualifications are convenient and only a small amount of money is needed to refinance. If you currently have a FHA mortgage and would like lower payments or a cash back from the escrow of your current mortgage, FHA Streamline Refinancing may be the perfect solution.