| Homeowners with a current FHA mortgage have | | | | interest payments |
| something that others don't, that is the opportunity to | | | | When getting an FHA streamline refinance without |
| refinance with no income verification, using an FHA | | | | using a new appraisal, the maximum loan amount will |
| streamline refinance. | | | | be determined by using the lesser of the following two |
| A stated income loan seemed to be a thing of the | | | | calculations: |
| past but, FHA will streamline a mortgage refinance to | | | | 1. The original principal balance of the existing FHA |
| reduce the documentation and underwriting normally | | | | mortgage, plus the new up front mortgage insurance |
| required. That means no tax returns, W-2 forms, or | | | | premium, which is currently 1.5% on a streamline |
| pay stubs, and no bank statements to verify assets. | | | | refinance. |
| Also, FHA does not require a credit report, but some | | | | 2. The existing FHA mortgage, plus closing costs, |
| lenders may require one for pricing the rate. A | | | | prepaid taxes, insurance, interest, and the new up front |
| verification of mortgage is required to determine if the | | | | mortgage insurance premium. Subtract refund of old |
| loan is delinquent, which is not allowed. | | | | premium. |
| Another potential benefit of the FHA streamline | | | | When using a new appraisal for an FHA streamline |
| refinance program is that a home appraisal may not | | | | refinance, the maximum loan amount will be |
| be needed. So, in addition to being like a stated income | | | | determined by the lesser of the following two |
| loan, without verifying income or assets, this loan can | | | | calculations: |
| also eliminate value as an obstacle, especially in a | | | | 1. The appraised value multiplied by the maximum loan |
| declining housing market. | | | | to value percentage, which usually ranges from 97% |
| As with all government programs, there are certain | | | | to 97.75% depending on the state and the loan |
| rules and limitations that determine if a refinance will fit | | | | amount. |
| into the FHA streamline guidelines, including the | | | | 2. The existing FHA mortgage, plus the closing costs, |
| following: | | | | prepaid property taxes, hazard insurance, up to 30 |
| 1. The current mortgage to be refinanced must already | | | | days interest, and subtract any refund of insurance |
| be FHA loan | | | | premium. |
| 2. The subject property must be the borrower's | | | | If there is a line of credit or second mortgage on the |
| primary residence | | | | home, the lien holder must agree to re-subordinate their |
| 3. The current mortgage to be refinanced should not | | | | loan regardless of the combined loan to value. The |
| be delinquent | | | | total amounts of the first and second mortgages can |
| 4. The streamline refinance only allows a maximum of | | | | exceed the normal loan to value and the maximum |
| $500 cash out | | | | mortgage limit. |
| 5. The refinance must result in reducing principal and | | | | |