Streamline Refinance
The mortgage term streamline refers to the amount of underwriting & documentation required by the FHA mortgage lender. HUD has permitted FHA streamline refinances on FHA loans since the early 1980’s.
The basic requirements of an FHA streamline refinance are:
The mortgage loan to be refinanced must already be FHA insured.
The home loan to be refinanced should be in a current status, and not delinquent.
The new FHA mortgage is to result in a lowering of the borrower’s monthly P&I payments.
No cashout on mortgages refinanced using the FHA streamline refinance process.
A FHA lender may offer FHA streamline refinancing in several ways. Some FHA Lenders offer no cost mortgage refinances. This is done by charging a higher mortgage rate on the new FHA loan. This yield spread premium is used to pay any fees or closing costs that is related to the mortgage transaction. Also, the FHA lender may include the fees or closing costs into the new FHA mortgage loan. This is done by using the equity in the home, and is also subject to the loan to value guidelines. FHA Streamline refinancing can also be done without performing an appraisal, verifying credit score, and verifying income. The new FHA loan amount may not exceed the original principal balance.