FHA Streamline Refinance
Streamline refinancing is refinancing an existing FHA-insured mortgage with limited borrower credit documentation and underwriting. There are two different kinds of streamlines with FHA mortgages, which are credit qualifying and non-credit qualifying streamline refinance.
Key Requirements for a FHA Streamline
- The mortgage must already be an FHA insured loan.
- The mortgage must be current.
- Loan cannot have any 30 day lates in the past 6 months prior to the case # assignment.
- No more than one 30 day late in the previous 12 months.
- Some liens can be subordinated – for example, deferred interest from a loan modification.
- Must meet a net tangible benefit.
The FHA streamline refinance allows you to refinance your mortgage without an appraisal, no credit score, and no income documentation. In some cases, it allows you to lower your mortgage insurance – on January 26, 2015 they lowered the mortgage insurance premium.
Benefits of a Non-credit Qualifying Streamline Refinance:
- Refund of escrow account.
- In the case of an escrow shortage, a new escrow account will be set up with the appropriate amount for taxes and insurance plus a 2 months cushion for any future increase in taxes and insurance.
- Defer up to two mortgage payments.
- Now includes manufactured homes
Bankruptcy and FHA Streamline Refinance
- An active Chapter 7 bankruptcy is not permitted.
- Bankruptcy must be discharged, but no seasoning required.
- Active Chapter 13 Bankruptcy is permitted with a court approval and proof trustee payment has been satisfactory.
- A discharged Chapter 13 Bankruptcy does not require any seasoning.
Some lenders have overlays and will not allow a streamline refinance with a recently discharged chapter 7 or 13 bankruptcy. If you have been denied in the past, it may have been because of lender overlays or being not properly qualified
Reduction of FHA MIP (Mortgagee Letter 2015-01):
Mortgagee letter information on the revised annual mortgage insurance premiums effective January 26, 2015.
Net Tangible Benefit for a Non-credit Qualifying Streamline Refinance:
More information from the HUD about the net tangible benefits for FHA streamline refinances.