What Is A Streamline Refinance?

By Kevin Landis

Tips to help you refinance your FHA loan without an appraisal or credit check through a program called streamline refinance.

Since the early 1980’s the FHA (Federal Housing Administration) has allowed a process called streamline refinancing for FHA-insured loans. A streamline refinance allows the lender to limit the amount of documentation and underwriting needed to process an FHA mortgage. This is a cost and time saving measure for both the homeowner and the lender.

Qualifications

There are specific requirements that must be met to qualify for a streamline refinance. First, the original home mortgage must be an FHA loan and there cannot be any delinquent payments on the loan in the past 12 months. Second, refinancing the loan must lower both the principal and interest of the loan. Finally, the homeowner will not be allowed to receive cash for any equity in the home, but if there is enough equity in the home, the closing costs may be added into the new mortgage to save the homeowner any out of pocket expenses.

Savings

Saving time and money are key factors in choosing a streamline refinance. In most cases, no credit check or appraisals are required. An appraisal of a home can take days or even weeks to complete. Bypassing this step saves time and allows the refinance process to move quickly. A credit check may also be omitted from the process. The idea behind the streamline refinance is that if the homeowner has been current on payments for the past 12 months then the homeowner should not have a problem making lower payments after refinancing.

Lenders

The homeowner does not have to use the same lender that processed and approved the original FHA mortgage. Any FHA approved lender can process the streamline refinance. Each lender may have specific loan criteria to follow and different options to choose from. Therefore, it is important to check out many lenders before choosing the lender for the refinance.

Related posts:

1. Why Can’t I Refinance To Lower My Interest Rate?
2. What Happens When I Refinance My Home?
3. If mortgage rates are low, should I refinance?
4. Does My New Refinance Rate Have To Be At Least 2 Points Lower Than My Current Rate?
5. How many times can you refinance a mortgage?