With an FHA streamlined refi, most folks have the misconception due to the program name “streamlined” that the refinances are close very quickly and are a slam dunk with little to no paperwork. While they do close quicker than a typical refinance since more often than not, you’re not waiting on an appraisal, if you’re going for a lower cost or better rate, you’re probably opting for a “credit qualifying” FHA streamlined refi. What’s the difference?
FHA streamlined credit qualifying basically means that the borrower is providing income and asset documents, just like a regular refinance. By providing documentation that shows they actually qualify for the new mortgage, lenders provide preferred pricing. Since it is a “manual” underwrite (a real human is underwriting the loan and not a computer program) the debt to income ratio is limited to 45%.
FHA streamlined non-credit qualifying is when income documentation is not provided and not stated on the loan application. The borrower’s income is not a consideration. Because of the higher risk, the rate or pricing is often slightly higher.
EDITORS NOTE: Rates quoted below are expired (years old!!)…for a current mortgage rate quote for your home in Washington state, click here.
Right now (July 25, 2012 at 11:00 am) I’m working on a quote for an FHA streamlined refinance for a home located in Seattle. The rates quoted below are based on mid credit scores of 680 – 720 with no appraisal and the base loan amount is $289,000.
FHA credit qualifying 30 year fixed: 3.375% (apr 4.548) priced with just over 1 point in rebate credit which will cover closing cost and some of the prepaids/reserves. Principal and interest payment is $1300.01.
FHA non-credit qualifying 30 year fixed: 3.750% (apr 4.934) priced just under 1 point (about 0.25% difference in fee) which covers closing cost and some of the prepaids/reserves. Principal and interest payment is $1361.82.
NOTE: for a current rate quote on a home located anywhere in Washington state, based on today’s pricing and your scenario, click here.
What type of supporting documentation is required? This is in additional to a complete loan application and credit report.
- Copy of your existing mortgage Note
- Copy of your mortgage statement (we need to document a “Net Tangible Benefit”)
- Bank statement (all pages) if funds are due at closing. Large deposits may be required to be documented.
- Drivers license
- Social security card
- Payoff obtained from escrow company documenting that the current month’s mortgage payment has been made
Credit qualifying: all the above, plus…
- last two years W2s
- last two years tax returns (if self employed)
- most recent paystubs documenting 30 days of income
- most recent bank statements (all pages) documenting at least funds for closing. Large deposits may be required to be documented.
Additional documentation may be required depending on your personal scenario.
Whether you opt for non-credit qualifying or credit qualifying is your choice and depends on your financial scenario. When rates and pricing are the same for both scenarios, most would opt for “non-credit” qualifying. Since recent changes with how HUD prices FHA mortgage insurance for some loans, there has been major changes with which banks are offering FHA streamlines and how they’re pricing them.
If I can help you refinance your FHA loan on your home located anywhere in Washington state, please contact me.