FHA has permitted streamline refinances on insured mortgages since the early 1980’s. The “streamline” refers only to the amount of documentation and underwriting that needs to be performed by the lender, and does not mean that there are no costs involved in the transaction. The basic requirements of a streamline refinance are:
|The mortgage to be refinanced must already be FHA insured.|
|The mortgage to be refinanced should be current (not delinquent).|
|The refinance is to result in a lowering of the borrower’s monthly principal and interest payments.|
|No cash may be taken out on mortgages refinanced using the streamline refinance process.|
Lenders may offer streamline refinances in several ways. Some lenders offer “no cost” refinances (actually, no out-of-pocket expenses to the borrower) by charging a higher rate of interest on the new loan than if the borrower financed or paid the closing costs in cash. From this premium, the lender pays any closing costs that are incurred on the transaction.
Lenders may offer streamline refinances and include the closing costs into the new mortgage amount. This can only be done if there is sufficient equity in the property, as determined by an appraisal. Streamline refinances can also be done without appraisals, but the new loan amount cannot exceed the original loan amount. Investment properties (properties in which the borrower does not reside in as his or her principal residence) may only be refinanced without an appraisal.
Detailed instructions to the lenders are contained in HUD Handbook 4155.1 REV-4, Change-1, Paragraph 1-12.
Besides there being no appraisal, there isn't any income verification either.
refi through FHA is an expensive deal. my daughter applied and you must pay mortgage insurance which is approx 100. per month so where is the savings??k
this obama remodification is a joke………… 3 complete packages turned in to chase and she is not eligible. what is going on? thought he was going to make a difference but it is politics as usual.
what refi is available for someone who has excellent credit and pays her mortgage and has never been late? when she bought the house she put in excess of 20% down and yet to refi if you don't put 20% down you must pay mortgage insurance.
FHA Streamlines are not expensive at all. Depending on which state you live in you still have title or attorney fees plus lender closing costs but compared to other mortgage transactions it's not expensive. They call it Streamline because you don't have to credit qualify (no credit report, minimum credit score, income or asset requirements). If you have a 30 Year FHA loan you already have PMI (.55%) and the new loan would have it too. The Streamline also avoids using a new Appraisal and accepts previous value. This is a big deal considering current property values.
The modification is a joke and hasn't worked real well at benefiting the number of people they thought it would.
As far as your last questions about refinancing without PMI, we are doing a lot of the Making Home Affordable Refinance loans. If you have a conventional loan with no PMI, you can refinance it without PMI up to 125% of the new value. This is huge! There are fees involved and it could add up but depending on your current interest rate and the rate you can refinance into, it could be worth it.
If you want us to work up some detailed options just compete the application our this website and we'll give you some personalized options. Thanks for commenting!