FHA Streamline Loan Defined

February 11, 2009

If you own a home you still owe mortgage payments on, chances are you're examining your refinancing options. In today's economy everyone needs a way to lower monthly payments and make housing more affordable. The FHA has a variety of refinancing options, including;

• FHA-insured refinancing loans for those who want to get out of conventional mortgages
• The HOPE for Homeowners program which is designed to assist borrowers who are in toxic debt because of out-of-control interest rates.
• FHA Streamline loans, designed for people who already have FHA mortgages. FHA Streamline loans have reduced paperwork, simple requirements for eligibility, and a list of features which makes FHA Streamline financing very attractive for borrowers.

FHA Streamline loans are very attractive because they don't require a credit check or income verification. If you have an FHA mortgage, you've already passed these qualification checks-you've already proven you are a good credit risk for an FHA-guaranteed loan. Because of this, you don't need to calculate a debt-to-income ratio for the new FHA Streamline loan, but it's always a good idea to have a second look at your finances for your own information.

Under FHA Streamline, you can choose not to have your home re-appraised--the original appraisal is used to calculate your loan amount. The caveat? Your new loan can't exceed the original amount you borrowed to purchase the home. You do have the option to get your property reappraised and qualify for a higher amount if the value of the property has increased. Be sure you know which you want to do before committing to the application process to make things as hassle-free as possible.

FHA Streamline loans don't require a meeting with your loan officer--you may be able to apply by phone or complete some paperwork over the Internet if your lender permits. The bank may require your actual, handwritten signature on some documents-be prepared to complete and mail in some forms before the process is officially declared finished.

An FHA Streamline Refinance loans aren't the same as cash-out refinancing programs, and you won't get any cash back when you sign the deal. The benefit with Streamline FHA-guaranteed loans? Your monthly payments are permanently lowered. The extra money you have at the end of the month can go a long way toward helping you reach your financial goals.

Just as with your original FHA insured loan, there are requirements; The FHA Streamline loan can only be used if the home is still your primary residence. You must be current on your original loan. If you need refinancing to avoid foreclosure, an FHA Streamline loan may right for you--the HOPE for Homeowners program may be better for your needs in this case. If you haven't missed any payments but fear your financial situation could change, FHA Streamline refinancing may be the right option. Ask your lender which option is best for your situation if you aren't sure.