For existing FHA mortgage loans, the FHA Streamline Refinance program is the most common and quickest way to refinance your home loan. The FHA Streamline Refinance program is unique because unlike most refinance loans, the streamline program does not require verifying income or assets. Depending on how much you have paid down on your original loan balance, no appraisal may be necessary. Beginning in January 2015, the new FHA MIP dropped to.85% from 1.35% and above.
For example, if you initially had a $200,000 loan, your new loan amount cannot exceed $201,500 or you will need a new appraisal on your property when you go through the FHA Streamline Refinance program. The FHA Streamline Refinance program will also allow for an unrestricted loan-to-value ratio, so you can refinance into a lower rate even if you are upside down on your loan.
The FHA Streamline Refinance program will take all the information used on the previous application when the buyer originally qualified for the loan. That is why the FHA Streamline Refinance program does not require verifying your current assets, credit score, and income. Your lender then repackages your application to give you your new mortgage with a lower interest rate.
Are you looking to gain access to the equity in your home? If so, the streamline program will not be the right program for you. Reason being, the Department of hHusing and Urban Development (HUD), prohibits homeowners from withdrawing equity under the FHA Streamline Refinance program.
There are closing costs initiated in refinancing through the FHA Streamline Refinance program. These FHA Streamline Refinance closing costs consist of lender and/or mortgage broker fees. These closing costs may be rolled into your new loan and attached to your monthly mortgage payment, but only if you get an appraisal on your home and the new loan will not exceed the original balance by more than 1.5%. If you do not get a home appraisal, you will need to pay closing costs out of pocket. Your lender may be willing to pay the closing costs for you if you accept a higher interest rate.