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FHA Home Loan Services extends the streamline refinance mortgage to existing FHA customers seeking a lower payment, reduced interest rate and favorable loan terms. FHA streamlined loans emerged onto the mortgage scene in the early 1980's. It refers only to the amount of documentation and underwriting that is conducted on a loan file by the mortgage company. FHA streamline refinance is for customers who already have a FHA mortgage.
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Streamline refinancing is a wonderful benefit that borrowers who already have a FHA insured mortgage and have not been delinquent on their mortgage payment for the previous 12 months.
It's a quick option for refinancing of interest rates cost with little or no out-of-pocket costs. Because it's a streamline refinance for customers who already have a FHA mortgage, there is no cash with this FHA refinance. Its sole purpose is to allow existing FHA customers to take advantage of FHA rate and term refinancing easily.
The FHA requirements for streamline refinance loan are simple:
Your existing loan must be FHA-insured, current, and in good standing.
You must have opened the loan at least six months prior to refinancing.
You cannot be late, delinquent, or in default of any federal debt.
Any subordinate financing may remain in place as long as it is subordinated on title.
The borrower may not receive cash from loan proceeds in excess of $500.
The streamline refinance must lower your interest rate, thus lowering monthly payments.
The term of the new mortgage must be the lesser of 30 years or the unexpired term of the mortgage plus 12 years. A borrower cannot refinance from a 15 year loan to a 30 year loan.
An appraisal is not required unless the closing costs are wrapped into the loan. Streamline refinances without an appraisal are limited to the unpaid principal balance, minus any refund credit of the mortgage insurance premium (MIP), plus the new upfront MIP if it is to be financed in the mortgage.
No termite inspection report is required.
Some FHA lenders 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 what is currently owed (i.e., closing costs may not be added to the new mortgage). Others 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.
If you don’t currently have a FHA loan, you can refinance into one. It just won’t be the FHA Streamline loan. You may want to explore FHASecure and the new housing rescue laws that were just passed on July 30, 2008. The FHA Secure is a temporary mortgage offer covered in the housing stimulus plan that President Bush signed into law earlier this year. Its purpose is to help those facing foreclosure. This plan is ending on December 31, 2008. But, you could always apply for a FHA refinance under the new housing laws. Like FHA Secure, this legislation is for helping people who have adjustable rate subprime mortgages refinance into a fixed rate mortgage and save their houses. Fill out the free loan quote form on this page. We’ll be happy to help.