Awhile back I did a video about the FHA streamline refinance program:
The FHA Streamline Refinance – Changing With The Times
Changes are inevitable in the mortgage industry, and the FHA Streamline Refinance program is not exempt from those changes. In the video (link for mobile), I said you might not need an appraisal for this program. Well, that has changed.
As of September 12th, 2011, the FHA Streamline Refi is only available without an appraisal.
This may seem a bit counter-intuitive in today’s tight mortgage lending environment.
However, the reasoning is that once the appraised value is set, you can’t switch it a non-appraisal FHA Streamline. If that appraisal comes in too low, you can’t refinance and lower your payment. So , going forward, there will be no appraisals on FHA Streamline refinances.
FHA Streamline Refis – The Basics
Your current mortgage needs to be an FHA home loan, and you need to be current with your payments.
When you fill out your loan application, much of it remains blank. Hence the word “Streamline”. Your information, the property information, and your employment information are the important items. There is no income, asset, or non-mortgage credit information needed.
A credit report is pulled, but it is “mortgage-only”. You need to be current on all mortgages. We (the bank) will do a verbal Verification of Employment, just to make sure you still have a job. We use your FHA case number to go into the FHA’s system and verify that your current mortgage is an FHA home loan, and the original sales price and appraised value, as well as the prorated refund of the original loan’s upfront funding fee .
Net Tangible Benefit
FHA Streamline Refinance guidelines state that there needs to be a 5% net tangible benefit to the refinance. This takes into account your current interest rate, the interest rate on the new loan, the new monthly mortgage insurance, etc. I could explain the calculations, but reading math is boring. I have a spreadsheet that allows me to plug in the relevant numbers, and then tells me if you qualify for an FHA Streamline or not based on the 5% net tangible benefit requirement.
You may or may not have some out of pocket expense, depending on the the new loan amount, closing costs, and pricing. Speaking of pricing (nice segue!), the FHA Streamline Refi is very popular right now because of how ridiculously low rates are right now. If you do have to bring some money to the closing table, you will have to provide bank statements proving you have said funds.
If the FHA Streamline Refi program is something you would like to explore, and you live in Oregon or Washington, give me a call at 503.799.4112, email jason@mypmb.us, or fill out this quick contact form. Thanks for stopping by!
