FHA has permitted streamline refinances on insured mortgages since the early
1980's. The "streamline" refers only to the amount of documentation and
underwriting that needs to be performed by the lender, and does not mean that
there are no costs involved in the transaction. The basic requirements of a
streamline refinance are:
Lenders may offer streamline refinances in several ways. Some lenders offer
"no cost" refinances (actually, no out-of-pocket expenses to the borrower) by
charging a higher rate of interest on the new loan than if the borrower financed
or paid the closing costs in cash. From this premium, the lender pays any
closing costs that are incurred on the transaction.
Lenders may offer streamline refinances and include the closing costs into the
new mortgage amount. This can only be done if there is sufficient equity in the
property, as determined by an appraisal. Streamline refinances can also be
done without appraisals, but the new loan amount cannot exceed the original
loan amount. Investment properties (properties in which the borrower does not
reside in as his or her principal residence) may only be refinanced without an
appraisal.
1980's. The "streamline" refers only to the amount of documentation and
underwriting that needs to be performed by the lender, and does not mean that
there are no costs involved in the transaction. The basic requirements of a
streamline refinance are:
- The mortgage to be refinanced must already be FHA insured.
- The mortgage to be refinanced should be current (not delinquent).
- The refinance is to result in a lowering of the borrower's monthly
- No cash may be taken out on mortgages refinanced using the
Lenders may offer streamline refinances in several ways. Some lenders offer
"no cost" refinances (actually, no out-of-pocket expenses to the borrower) by
charging a higher rate of interest on the new loan than if the borrower financed
or paid the closing costs in cash. From this premium, the lender pays any
closing costs that are incurred on the transaction.
Lenders may offer streamline refinances and include the closing costs into the
new mortgage amount. This can only be done if there is sufficient equity in the
property, as determined by an appraisal. Streamline refinances can also be
done without appraisals, but the new loan amount cannot exceed the original
loan amount. Investment properties (properties in which the borrower does not
reside in as his or her principal residence) may only be refinanced without an
appraisal.
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FHA Streamline Quick Facts
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