What is the Streamlined Refinance?



The FHA has permitted streamlined refinance loans since the 1980s. A streamlined refinance is the same as a conventional refinance, but with reduced paperwork. It does not eliminate all of the fees or costs associated with refinancing. Some fees and costs may be reduced or eliminated, however, because of the reduced paperwork and lower number of requirements that must be met.

What are the requirements to qualify for a streamlined FHA refinance?

To qualify for a streamlined refinance, you must meet the following basic qualifications:

* You already have an FHA-insured mortgage

* The mortgage payments are current

* You want to reduce your interest rate or monthly payments

* You don't want a cash-out refinance

Can I get a no-cost FHA refinance?

Some lenders offer streamlined refinancing, however it simply means that you don't pay cash out of your own pocket to cover the fees. Instead, the fees are bundled into the loan via a higher interest rate than would receive with a mortgage requiring cash. You could also opt to include the closing costs in the new mortgage balance, but you need to have sufficient equity in the house to cover those closing costs. You can't refinance the home for more than it's currently worth.

How do I pull out cash?

If you want to borrow against your equity, then you'll either need to go through the full underwriting process to receive a new mortgage with a higher balance, or apply for a home equity loan.

Do I need an appraisal?

Streamlined refinancing can be done without an appraisal if you're not increasing the original loan balance by including closing costs. If you do include the closing costs in the loan, then an appraisal is needed to determine whether there is sufficient value to cover them.

How do I apply?

Start by contacting your lender to confirm that they are still an FHA-approved lender and offer streamlined refinancing. If you're able to refinance through your current lender, you may be able to avoid some fees, such as title insurance. If your lender doesn't offer FHA refinancing, contact additional FHA-approved lenders for help refinancing.

How long does FHA refinancing take?

A streamlined refinance is usually takes much less time than either a new mortgage on a new home or a conventional refinance. Some can be closed in as little as two weeks, but times vary. Your lender can advise you about the timeframe and what is expected of you during the process.

How do I know if refinancing is right for me?

Only you can decide whether refinancing your mortgage is the right choice. If you currently have a high mortgage rate or an adjustable-rate mortgage that will soon adjust to a much higher rate, then refinancing could save you money. It may also be worthwhile if you can reduce the interest rate slightly and plan to stay in the home for several more years. However, if you plan to move in a few years, the costs of refinancing may be more than you would save by continuing to pay the mortgage at the current rate.

Can I do a streamlined refinance if my house is worth less than the loan balance?

It may be possible if you choose to pay costs at closing in order to avoid an appraisal, but only a lender can tell you whether you're likely to qualify for a new loan in this circumstance.

The FHA refinance program has helped thousands of homeowners reduce their interest rates and mortgage payments quickly and easily. Contact a lender today to see if you qualify.