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The FHA Streamline Loan option features reduced paperwork and faster processing than the initial FHA loan application, but these loans don't permit money back to the borrower as they are designed primarily to give lower payment or interest rates.

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News and Updates for Homeowners

Rules for FHA Streamline Refinancing Loans

December 16, 2011 - Are you looking to lower your monthly obligations, get a lower mortgage and/or lower the interest rate on your FHA home loan?

FHA Streamline Refinancing Loans are designed to help. This type of refinancing is appealing because in many cases there's no additional credit check required by the FHA Streamline Loan rules (though your lender may require one).

The FHA Streamline Loan option features reduced paperwork and faster processing than the initial FHA loan application, but these loans don't permit money back to the borrower as they are designed primarily to give lower payment or interest rates.

In some cases, the lender won't have the option to process the FHA refinancing loan with no credit check-any change in the mortgage term that results "in an increase in the mortgage payment of more than 20%" requires new underwriting according to the FHA rules. As does a situation where "deletion of a borrower or borrowers will trigger the due-on-sale clause" and where a mortgage has been assumed in certain cases.

What does the lender need when a credit-qualifying FHA streamline loan application is submitted? According to the rules, "For credit qualifying streamline refinances, the lender must.verify the borrower's income and credit report , compute the debt-to-income ratios, and determine that the borrower will continue to make mortgage payments."

With streamline refinancing, a borrower is able to get a streamline loan only for owner-occupied residences, or secondary residences meeting specific HUD standards. There are exceptions for qualifying non-profit agencies and government entities, but a typical borrower must live in the home being refinanced unless "an undue hardship exists, meaning that affordable rental housing that meets the needs of the family is not available for lease in the area or within reasonable commuting distance of work".

FHA Streamline Refinancing is an excellent way to lower your monthly payments or interest rates. FHA rules require these loans to offer a tangible benefit to the borrower, and the criteria is strict when it comes to those benefits--but the end results are definitely worth it.