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FHA Streamline RefinanceRefinancing: When interest rates are low, it is an ideal time for you to refinance. Refinancing your home mortgage loan can save money by lowering your monthly mortgage payment and interest rate. The FHA (Federal Housing Administration) has created a rate reduction program called the Streamline Refinance. By refinancing your home loan you will be creating a new mortgage, but it will pay off your present one. If your home loan is still FHA insured you can use the Streamline Refinance. This will greatly reduce the amount of paper work you will have to produce. The "streamline" refers only to the amount of documentation and underwriting that needs to be performed by the lender, and does not mean that there are no costs involved in the transaction. The basic requirements of a streamline refinance are: 1) The mortgage to be refinanced must already be FHA insured. 2) The mortgage to be refinanced should be current (not delinquent). 3) The refinance is to result in a lowering of the borrower's monthly principal and interest payments. 4) No cash may be taken out on mortgages refinanced using the streamline refinance process. Lenders may offer streamline refinances in several ways. Some lenders offer "no cost" refinances (actually, no out-of-pocket expenses to the borrower) by charging a higher rate of interest on the new loan than if the borrower financed or paid the closing costs in cash. From this premium, the lender pays any closing costs that are incurred on the transaction. Lenders may offer streamline refinances and include the closing costs into the new mortgage amount. This can only be done if there is sufficient equity in the property, as determined by an appraisal. Streamline refinances can also be done without appraisals, but the new loan amount cannot exceed the original loan amount. Investment properties (properties in which the borrower does not reside in as his or her principal residence) may only be refinanced without an appraisal. For more information go to: www.hud.gov/offices/hsg/sfh/buying/streamli.cfm |
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