| It is an experience of most borrowers that when they | | | | does not mean that your lender would not charge you |
| plan to borrow a loan, they calculate and find that the | | | | anything. |
| monthly mortgage payment of the given amount | | | | Types of FHA streamline refinance: |
| should not be a problem for them to pay regularly | | | | There are three types are: with appraisal, without |
| every month. But due to various reasons, two of the | | | | appraisal and 'credit qualifying'. However, as per FHA |
| most common of which are job loss and reduction in | | | | rules, you are not required to complete repairs except |
| salary/income. It becomes tough to continue paying the | | | | lead based paint repairs in case of appraisals for FHA |
| same amount. However if these borrowers have | | | | streamline refinance loans. But lenders may include |
| attitude and the willing to pay back and what they find | | | | compulsory repairing as a condition for offering an |
| is that they continue paying if they have to pay a | | | | FHA streamline refinance mortgage. The FHA |
| lower amount. | | | | streamline refinance guidelines are given below. |
| Therefore, in order to help borrowers pay regularly, at | | | | FHA Streamline Refinance: Basic Eligibility Conditions |
| the same considering the genuine problem of their | | | | - The loan that is to be refinanced must already be |
| reduction in income due to any reason; Lenders on the | | | | FHA insured |
| request of borrowers consider restructuring or | | | | - The mortgage to be refinanced must be current and |
| readjusting their loan in order to streamline the whole | | | | existing NOT delinquent. |
| process. This restructuring or readjustment is done by | | | | - The refinance of exiting mortgage should result in |
| offering them a new loan but the objective is to help | | | | reduction in the borrowers monthly mortgage payment |
| the borrower pay a lower amount. Therefore, FHA | | | | that includes principal and payment towards interest. |
| streamline refinance are the type of FHA loans, which | | | | Lenders have several options of offering streamline |
| are offered to borrowers in order to reduce the | | | | refinance to borrowers e.g. there are lenders who |
| monthly principal and interest amount on a current FHA | | | | offer "no cost" refinance which is practically no out of |
| insured mortgage. FHA streamline refinance does not | | | | pocket expenses. But in this case, closing costs are |
| involve any cash transaction except for minor | | | | met by charging a higher rate of interest on the new |
| adjustments during closing up to a limit of $250. | | | | loan compared to rate of interest on a loan in which |
| What does streamline mean? | | | | the borrower paid the total closing cost in cash. In this |
| An important aspect here is that the word 'streamline' | | | | case, the lender compensates the closing cost through |
| should be understood only in the context of | | | | the extra premium received. |
| documentation and underwriting that a lender performs. | | | | Therefore, overall FHA streamline refinance is an |
| 'Streamline' should be taken as if there are no cost | | | | excellent concept in order to reduce the amount of |
| involved. Even above, we have used the word | | | | monthly mortgage payment by reducing the principal |
| 'adjustment' as a synonym of streamline in order to | | | | amount and the payment on interest. |
| explain this word but it only refers to the process and | | | | |