The FHA Streamlined Refinance

EDITORS NOTE August 23, 2009:  With any mortgage information that you find on the internet, whether it's from a blog or website, be mindful that guidelines are changing constantly in this current climate and information may not be totally up-to-date. 

September 29, 2009:  HUD has issued revisions to FHA Streamlined refi's which will be effective mid-November.

If your existing mortgage is FHA, you may qualify for a streamline refinance to take advantage of today's lower rates.  "Streamline" means that there is less documentation involved for the borrower which allows the transaction to close quicker than a typical refinance.  With a FHA streamline refi there is:

• no income documentation or verification. UPDATE 8/23/2009:  Many lenders are now requiring proof of income/employment to show ability to make the mortgage payment.
• no minimum credit score requirements. 620 minimum credit score required by most lenders. UPDATE 8/23/2009: Many lenders are now requiring a 660 minimum credit score. 
• no verification or documentation of assets (like bank statements, retirement accounts, etc).
• an appraisal may not be required.   When an appraisal is used for an FHA Streamline, the loan to value is limited to 97.75% (this is also true for refinancing a non-FHA loan to a FHA insured loan).  When an appraisal is not used, there is no "loan to value" ratio and closing costs may not be financed. (Updated).
• upfront mortgage insurance is reduced to 1.5% of the base loan amount (instead of 1.75% for a non-streamline FHA refi) ). 2.25% (and proposed to be changed soon). 
• cash back to the borrower is limited to $500. 

The following are some of the requirements for a home owner to qualify for a FHA refinance:

• the existing mortgage that is being paid off must be an FHA insured mortgage.
• the borrower may not have been late (30 days or more) on their mortgage payment in the past 12 months.
• the new loan amount is subject to FHA loan limits.  Note: if you have an FHA mortgage that was acquired in 2008 where your geographical loan limit was higher than the current 2009 limit, you may still qualify for the streamline refi as long as your new loan amount does not exceed the original loan amount and the loan to value is 97.75% or less.

If a property has been converted to an investment property with a FHA insured underlying mortgage, it may also qualify for a FHA Streamline refi with no appraisal and only for the outstanding principal balance.

Last but no least, make sure that your Mortgage Originator works for a company who is HUD approved.  Some loan originators are not and may try to illegally broker your loan to a company that is.  I have been helping Washington State families with FHA financing since 2000 and Mortgage Master is a Direct Endorsed HUD approved lender with our own "in-house" FHA underwriters.  They've been helping home owners in the Pacific Northwest since 1976!

If you're interested in obtaining a FHA Streamline refinance for your home located in the State of Washington, please email me with the following information: 

• Property address (estimated property taxes and home owners insurance is a plus).
• Original FHA mortgage balance from when the mortgage was obtained.
• Original amount of UFMIP (upfront mortgage insurance premium) and when you obtained the FHA insured loan.
• Current FHA mortgage balance.
• Estimated home value (appraisal may not be required).