FHA Streamline Refinance

Streamline refinances have been designed to make the borrower pay lower monthly interest and principal payments on an existing FHA - insured mortgage and should involve no cash given back to the borrower, except If there are minor changes and adjustments to make sure that it will not exceed $250.

This streamline refinances could be done with or without an appraisal. To obtain a streamline refinance, form HUD 92564-VC is essential, but the summary of the homebuyer will not be required. For a streamline refinance FHA will not require any repairs to be done but it may be a condition of the loan. In this type of loan FHA does not typically require a credit report or a termite inspection report, but the lender might require either of the two reports as part of its credit policy.

In streamline refinance without appraisal, the borrower will get the maximum insurable mortgage that will be the lower of the two calculations as shown below:

1. The actual principal balance on the mortgage that includes the mortgage insurance premium along with the new upfront premium that is to be charged on the refinance. (or)
2. The existing FHA insured lien, prepaid expenses, closing costs, and other discount points that will be necessary to establish an escrow account and subtract the refund of UFMIP if any. The first lien would include the interest charged by the existing lender when the payoff is not received as assessed on FHA mortgages, but will not include the delinquent interest or other charges.

The mortgage calculation will be applicable to owner occupied properties and in case of the investment properties the refinancing will be done only for the outstanding principal balance.

Streamline refinances for secondary residences would be done only without an appraisal and will be made only in the business entity name if it has been insured in that same name. In the new security instrument, the document will contain FHA standard provisions permitting acceleration, but FHA does not intend to authorize any lender to exercise this acceleration provision, if the borrower has a proper credit record.

In case of Streamline refinancing with appraisal, the maximum insurable mortgage would be the lower of the appropriate loan to value ratio as applied by the appraiser or it will be the sum of the existing indebtedness and other related expenses to be refinanced. In the case of loan to value ratio it will be calculated by multiplying the appraised value with the appropriate factor for the property and it will also depend on the area of the property and the state in which it is located. In the case of credit qualifying streamline refinance, it contains the normal features of regular streamline refinance, but will provide a level of assurance that will ensure continued performance on the mortgage. The lender will have to provide evidence that the remaining borrowers do have an acceptable credit history and do have the ability to make the payments. In the credit qualifying transaction the most important document would be the credit-qualifying document and the lender will have to mention the mortgage loan amount with or without appraisal and the purpose.