FHA Streamline Refinance Program

Homeowners with an existing Federal Housing Administration (FHA) backed mortgage are eligible for the streamline refinance mortgage program. This program offers many benefits, which include: no appraisal, less paperwork, and limited underwriting requirements. One of the relaxed underwriting requirements is income verification. Although, the borrower(s) employment or source of income is required to be verified, there is no debt-to-income ratio used as a condition for approval. This refinance program is one of the fastest and simplest ways to refinance a mortgage to a lower rate. Even if you owe more on your mortgage then your home is worth, you can use the FHA streamline refinance program to lower your payment. Because of these relaxed underwriting guidelines, most mortgages refinanced under this program close within 30 days. This is a special mortgage product that is only available to homeowners with an existing FHA mortgage. It does not require an appraisal; instead FHA allows the original purchase price of the house to be used.

The FHA streamline refinance qualifications include the following:

• Mortgage Payment History - In general, lenders require homeowners with an FHA backed mortgage to be on time for at least the past 12 months.

• Employment Verification - Most lenders require employment or source of income to be verified, although a debt-to-income ratio is not required. Typically, the lender will verify that there is a source of income.

• Credit Score - FHA guidelines will require the lender to verify the mortgage payment history, but most lenders will also require a minimum credit score. The borrower(s) other credit history is typically ignored. Most lenders require a minimum credit score of 580 for the FHA streamline refinance program. The credit score will likely determine the maximum loan-to-value that a lender will allow for this program, which is based on a computer generated automated value of the house.

• Loan Term and Type - This program is available as a fixed or adjustable rate with a 15 or 30 year term.

• Appraisal - For the most part, lenders will not require an appraisal if the mortgage balance does not increase except for adding in the upfront mortgage insurance premium, which is paid to FHA. Although, most lenders will require an automated valuation to determine the estimated value of the property.

Remember, lenders will likely have more restrictive guidelines than the FHA requires. So, when you are talking to a lender about refinancing your home under this program, thoroughly discuss your situation and ask the lender about their overlays to the standard FHA streamline requirements. To qualify for this program, the principal, interest, and mortgage insurance must be at least 5% lower than the current monthly mortgage payment. Lenders will refer to the monthly savings from refinancing the mortgage as the net tangible benefit. This refinance type has been created to decrease a homeowner's monthly payment, thereby putting them in a better financial situation. It does not allow for the borrower to increase their mortgage, nor does it allow a borrower to take equity out of their house.

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