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Learn More about FHA Streamline Loans and Refinances

The Federal Housing Administration's goal of making home owning a possibility does not end with FHA loans. Another great service provided by the FHA is Streamline Refinancing. Streamline Refinances are great ways to reduce interest rates and lower monthly payments on existing FHA mortgages. They are termed "streamlined" because the relative lack of hassle or paperwork to be done to acquire such refinancing.

Other benefits of choosing a Streamline Refinance is that appraisals, credit checks, income verification, or employment verification are usually not required. It is very easy to increase or decrease the length of the term of the existing FHA loan. Also, out-of-pocket costs are minimal, and possibly zero.

There are two types of FHA Streamline Refinancing:

  • The refinance can include the closing costs into the new mortgage loan, which can happen if the property has sufficient equity, which requires appraisal. This option offers the best rate.
  • The "no-cost" refinance offers no expenses or cost to the borrower. This refinancing requires no appraisal, and the new loan amount cannot exceed what is currently owed. The lender pays the closing cost. No appraisal is needed for investment properties in which the borrower does not reside.

The requirements for a FHA Streamline Refinance must be fulfilled before obtaining a refinance. Most importantly, the existing loan must be FHA-insured, current, and in good standing. Six months must have passed since the original loan was taken out before a Streamline Refinance can occur. The Streamline Refinance must lower the borrower's interest rate, thus lowering monthly payments. There is no cash back option for this type of refinance.

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