The FHA Streamline Refinance program has helped many borrowers lower their interest rates and housing payments. FHA has long held the view that decreasing a borrower’s monthly payment should be a good thing and very easy to accomplish as long as the borrower has been making their payments on time. After all, if the borrower is already making the payments and FHA has already insured the mortgage either way, then why be picky about the details. Thus, the FHA streamline refinance process has always been an easy one.
Unfortunately, as we hear so commonly in the mortgage business today, the times are changing. In response to today’s economic climate and increasing defaults on FHA, FHA streamline refinance requirements were tightened considerably at the beginning of 2010.
Here are the highlights of the primary changes:
- FHA borrowers must now be employed at the time of application
- Any cash needed to close must be fully verified
- If the borrower needs to “roll in” any closing costs at all to their loan amount, then the lender must have a full appraisal done
- Borrowers must now have made at least 6 payments on their loan before refinancing
- There must be a specifically allowed net tangible benefit to the borrower.
Keep in mind that lenders are also allowed to tighten up these guidelines even further, and many have. An FHA streamline refinance is still only insured by FHA. FHA is not the lender. So before you commit to an FHA streamline refinance, be sure to obtain quotes from different lenders and realize that the guidelines may be different for different lenders. A full breakdown of the 2010 FHA Streamline Refinance Guidelines is available at the link below.
Comments(1)