I decided to venture out in the blogoshpere today to see what some other lenders are writing about FHA Streamlines. As I have stated, you can't believe everything that you read, even if it sounds true.
In this post, I want to highlight some of the misleading facts that I read and to share with you what is actually right.
FHA loans have been around since 1934 and FHA streamlines been around since the 1980's. It is basically for those borrowers that currently have a FHA mortgage. FHA's sole purpose is to streamline the process, making it very simple and quick when refinancing. The main key points of FHA streamlines are :
- no credit check or income verifications
- no cash-out
Here is what I found on the internet. The misleading information will be underlined and the correct answers will be in
Blue.
Streamlining does not require an appraisal; there are no closing costs. There are always costs of doing a mortgage. It just depends on if the lender passes it along to you or builds it into the rate.; no employment verification, no credit scoring, no debt to income requirement. You just need a good mortgage history with no late payments it states here, fha streamlines/handbooks/.pdf, that FHA does not require a credit report. You can have lates, you just have to be current on the mortgage when going to settlement ; unless the late payment was AFTER a rate adjustment - this is applied on the FHA secure loan.
What are the requirements for a streamline refinance?
The only basic requirement of a streamline refinance is; a person can not have more than one late FHA mortgage payment in a six month period. I already explained this above.
However, if that person does have more than one late payment they may still quallify after paying some additional fees. This sounds like how a lender can have the excuse to charge you more in fees or a higher rate.
How long does a streamline refinance typically take?
A typical streamline loan takes between 25 to 40 days to complete, depending on the time of the month that you lock in your rate. Wow.... it shouldn't take that long to even process a regular FHA loan or FHA mortgage. A streamline should take no more than 10 to 15 days, depending if you need an appraisal or not.
Here are your two types of FHA streamlines :
1. Streamline refinance with an appraisal : This is where you can include your closing costs within the loan amount. There are two types of calculations to achieve this type of refinance. The lower of the two would be used.
- Maximum loan-to-value percentages multiplied by the appraised value, exclusive of closing costs.
- By adding the existing first mortgage lien, the closing costs, accrued late charges, escrow shortages, and any pre-paid items minus any refund of the upfront MIP (mortgage insurance premium).
2. Streamline refinance without an appraisal : The calculation for this is to include the original principal balance of an existing FHA mortgage to include any new upfront MIP.
These 2 types of refinancing are only for primary residences only. Investment properties that were originally bought as a primary residence, may only be refinanced without an appraisal to only include the outstanding principal and nothing more.
If you have a 2nd mortgage or any junior liens older than twelve months old, then this would be considered a regular refinance and could not be done as a streamline refinance. And then you would have to qualify with income and credit.
FHA programs and insight :
The First Time Homebuyer Series :
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For more information on FHA loans, please go to this link. The FHA Expert
For more information on how you can obtain your dream home, please click here : Mortgage Financing Options
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!!
Copyright © 2008 by Jeff Belonger
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Jeff: This is good news. It is great that there is some help on the horizon for at least some of the homeowners who could badly use it. Thanks for sharing.