More the reason why you need to speak to a knowledgeable professional loan officer
With mortgage interest rates being so low, you would think many people are refinancing. And one would think that more would be doing FHA streamline refinances, because it should be so easy, hence the name streamline. Sorry to sound negative, but no and no, for many reasons.
There is also a mortgage myth, aka mortgage rumor, that FHA streamlines are cheaper than regular FHA loans. A complete lie. I just had a potential borrower that was told this. Yes, there are some lenders that advertise that FHA streamlines are quick with no costs. But mortgage alert, FHA streamlines are the same price. I talk to other loan officers from all over about this and they agree 100%. It just comes down to the type of sales person that you are talking to, and how they want to get you in the door. Just be careful of what you read and hear.
What are such reasons why FHA Streamlines sound so easy : (new mortgagee letter -Mortgagee Letter 2009-32)
Credit scores - FHA streamlines have a minimum credit score of 500. But most lenders/investors want a 640 + credit score.
Equity - You can do a FHA streamline while under water on your home, but you will need to pay for all of your closing costs. -Understand FHA streamlines-
Credit - At time of application, the applicant must have made 6 payments on their current FHA-insured loan. For mortgages with less than a 12 month payment history, the borrower must have made all of their payments within the month due. (this means no mortgage lates) For mortgages with a 12 + month mortgage history, the borrower must have a.) experienced no more than one 30 day late payment in the preceding 12 months AND b.) made all mortgage payments within the month due for the three months prior to the date of the application.
Net Tangible Benefit - The lender must determine if there is a net tangible benefit, determining if the streamline refinance makes sense, that it doesn't hurt the borrower financially. There are some factors that are found in Mortgagee Letter 2009-32, under net tangible benefit.
In regards to FHA loans in general, if you are doing a 15 year FHA mortgage and your LTV is 90% or less, you will not have monthly mortgage insurance. (New FHA mortgage insurance changes) I spoke to a potential borrower yesterday that spoke to two other loan officers that never brought this up to him, as he was shopping for his mortgage when he inquired about 15 yr fixed rates.
Continuing with this person above who was shopping for mortgages. I was the third loan officer that he spoke to who had sent him good faith estimates two days prior. I sent mine yesterday and he followed up with me today around 1 pm. I had to say,"hey Mr. Borrower, rates got slightly worse today, so I need to send you a new cost sheet, aka the old good faith estimates." I then asked.. "by the way, did these other 2 loan officers call you or e-mail about any changes, which have happened yesterday and today?" He said no.... Sorry people, this is a slight red flag, because these two other loan officers new that he was shopping around, because he told them. And mortgage interest rates have slightly gone up in the last week, but some loan officers won't tell you until you commit.
Summary : Very simple and very easy. Just because someone promises the best, makes it sound like it's the cheapest way, or doesn't follow up properly, doesn't mean that your transaction will go smoothly. And unfortunately you won't know until the end or when it's to late. Not trying to scare you here, but just shop carefully and wisely. And use some of these tips.