FHA Streamline Refinance

FHA Streamline Refinance or FHA Simple Refinance

FHA has a required net tangible benefit that has to be present to be eligible for a streamline.

What is a FHA Streamline Refinance?

An FHA Streamline Refinance is used to provide an additional Borrower Benefit for a current FHA borrower, generally lowering the existing payment. FHA Streamlines can be done without an appraisal, with or without credit qualifying, and often without cost.

What is a Credit Qualifying Streamline and when is it required?

A Credit Qualifying Streamline is a Streamline refinance where the borrower must meet income requirements, and undergo a full credit analysis. It is required in the following scenarios

• When a change in the mortgage term will result in an increase in the mortgage payment of more than 20% (Not allowed for Investment properties)*
• When deletion of a borrower or borrowers will trigger the due-on-sale clause
• Following the assumption of a mortgage that
  • occurred less than six months previously, and
  • does not contain restrictions (i.e. due-on-sale clause) limiting assumption only to a creditworthy borrower
• Following the assumption of a mortgage that
  • occurred less than six months previously, and
  • did not trigger the transferability restriction (that is, the due-on-sale clause), such as in a property transfer resulting from a divorce decree or by devise or descent.

*No Streamline Refinance can be used for the express purpose of reducing the mortgage term.

When can a borrower be removed on a Streamline?

Borrowers can be removed when doing a Streamline under any of the following scenarios:

• The streamline is Credit Qualifying
• When
  • An assumption of a mortgage not containing a due-on-sale clause occurred more than six months previously, and
  • The assumptor can document that they made mortgage payments during the interim period
• Following an assumption of a mortgage in which the
  • Transferability restriction (due-on-sale clause) was not triggered. For instance, during a property transfer resulting from a divorce decree or by devise or descent
  • The assumption or quit-claim of interest occurred more than six months previously
  • The remaining owner-occupant can demonstrate that they have made mortgage payments during this time

What if FHA condo approval was withdrawn or has expired for the property?

FHA will only allow Streamlines without appraisal for loans on properties with condo approval that have expired or been withdrawn.

Cash-Out Refinance

A cash-out refinance pays for your current mortgage, as well as gives you extra cash to spend once the loan costs are paid. You can get a cash-out refinance with your FHA loan.

FHA cash-out refinance loans can provide lower interest rates as well as cheaper closing costs. There are also less stringent and requirements and documentation needed than in other private refinance options. You can refinance for up to 85% of the the home’s value.

What is a Simple Refinance?

A Simple Refinance is a no cash‐out refinance of an existing FHA‐insured mortgage in which all proceeds are used to pay off the existing FHA‐insured mortgage on the subject property plus eligible costs associated with the transaction, such as late charges, escrow shortages, and borrower paid repairs as required by the appraisal.

FHA also offers 203k rehabilitation loans.