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Learn About Your Mortgage Options
Sending a child to college, consolidating bills, taking a much needed vacation, or making home improvements are some of the ways homeowners tap into the equity they have accumulated in their home to help with these expenses. Keep in mind that FHA refinancing is only available to homeowners who are currently using their home as their principal residence.

FHA Streamline Benefits
  • Appraisal usually not required
  • Very little paperwork
  • No credit check, income verification, employee verification, or underwriting fees
  • Easily increase or decrease the length of the term of your existing loan
  • Take advantage of current low interest rates
  • Little or no out-of-pocket costs

FHA Refinance: Streamlined Refinance
This refinancing option is considered streamlined because it allows you to reduce the interest rate on your current home loan quickly and oftentimes without an appraisal. FHA Streamlined Refinance also cuts down on the amount of paperwork that must be completed by your lender saving you valuable time and money.

In order to qualify for a Streamlined Refinance your original home loan must be an FHA loan in good standing and the refinance must lower your monthly interest payments. This type of refinancing option reduces your monthly expenses by lowering your payments but there is no option to receive cash back. This works well for people who are in good financial standing with no significant debt because it allows you a little extra money each month that can be put to good use elsewhere.

If you have a conventional loan you wish to refinance with an FHA refinance loan, you'll need to apply with the usual employment verification, credit check, debte ratio requirements and other considerations. An FHA refinance loan can get you many of the same results, and you may get better rates and lower payments.

FHA has permitted streamline refinances on insured mortgages since the early 1980's. 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:

  • The mortgage to be refinanced must already be FHA insured.
  • The mortgage to be refinanced should be current (not delinquent).
  • The refinance is to result in a lowering of the borrower's monthly principal and interest payments.
  • 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.
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