| Cash-Out, No Cash-Out, and FHA Streamline | | | | OR, the appraised value x 97.75% (97.65%, or 97.15%, |
| Refinance mortgage programs can be a great asset | | | | high or low cost state). Which ever is less! |
| to todays homeowners that want to lower payments | | | | IF the smallest of these two values is greater than the |
| or get out of an adjustable rate mortgage. FHA loans | | | | original mortgage balance credit verification is required. |
| have always been a great option with very low | | | | Streamline Refinance - "Credit Qualifying": |
| interest rates. | | | | The loan amount is calculated based on the previous |
| Streamline refinances can only be used on a current | | | | formulas and qualifying requires full employment |
| FHA mortgage. They can be done with or without an | | | | verification, credit report, and debt to income ratio |
| appraisal, and with or without credit qualification. The | | | | compliance. Typically these loans are used when the |
| streamline refinance does not allow for any cash back | | | | new mortgage payment will be higher, deletion of a |
| to the borrower. | | | | borrower on new mortgage, or in assumptions |
| Loan Type Conversion Allowed: | | | | involving due-on-sale clauses. |
| 1. 30 yr fixed to 30 yr fixed: The new payment must | | | | FHA "No Cash Out" Refinance: |
| be lower than the old payment. | | | | This regular no-cash-out loan may be used to |
| 2. 30 yr fixed to 15 yr fixed: New payment cannot be | | | | refinance an FHA mortgage, VA mortgage, or a |
| more than $50 higher. Note: 15 yr fixed to 30 yr fixed | | | | conventional mortgage and requires the borrower to |
| is not allowed. | | | | fully qualify. Second mortgages may be included in the |
| 3. Fixed Rate to ARM: Owner occupied homes only | | | | new loan if they are older than one year or you can |
| 4. ARM to Fixed Rate | | | | prove that the funds were used solely to repair or |
| 5. ARM to ARM: Rate must be lower than current loan | | | | rehabilitate the home. If not, paying off or including |
| 6. 203K to 203B | | | | these loans would be considered a cash-out refinance. |
| Streamline Refinance "Without" An Appraisal: | | | | This loan can be used to buy out the equity of an |
| The new loan amount cannot be more than the original | | | | ex-spouse provided it is documented in the divorce |
| loan amount, OR more than the current principle | | | | papers. It is still considered a no-cash-out because this |
| balance plus closing cost. ... Which ever is less. This | | | | equity is considered indebtedness. |
| only applies to owner occupied as non-owner | | | | IF the property was purchased less than a year ago |
| occupied borrowers can only refinance the existing | | | | and is not currently an FHA loan, the loan amount will |
| balance do not have the option of rolling in the closing | | | | be the appraised value plus closing cost, OR the |
| costs. | | | | original sales price plus closing cost. Which ever is less! |
| The only credit verification required is a verification of | | | | If the home was purchased more than a year ago |
| mortgage payments. This can be done with 12 copies | | | | and does not have FHA financing, the loan amount |
| of canceled checks, front and back. IF canceled | | | | should be calculated as the "streamline refinance with |
| checks are available, no in-file report is required unless | | | | an appraisal" above. |
| the underwriter prefers that method to verify | | | | FHA "Cash Out" Refinance: |
| mortgage payments. | | | | This loan can be used to refinance an FHA loan, VA |
| Streamline Refinance "With" An Appraisal: | | | | loan, or Conventional loan. This loan has many |
| An FHA streamline refinance with an appraisal allows | | | | advantages: Max loan to value is 75% for conventional |
| the borrower to finance in the closing costs, discount | | | | loans but FHA loans allow 85% plus a portion of the |
| points, and prepaids provided it all fits within the loan to | | | | closing costs. |
| value limits. The new loan amount may be the current | | | | The property must be owner occupied and the |
| principle plus closing costs, discount points and prepaids, | | | | borrower must fully qualify. |