Updated as of January 2017
An FHA streamline refinance is often considered by FHA homeowners who would like to reduce their rate and mortgage payments with less documentation required. The streamline refinance program is one of the benefits that the FHA offers to its borrowers, as it is usually a quick and the least expensive process with lenient documentation and credit standards as opposed to a traditional or simple refinance.
Benefits of an FHA Streamline Refinance
If you are a current FHA-insured mortgage homeowner, you may find that the FHA offers several advantages. One of the advantages is the FHA Streamline Refinance program which allows eligible borrowers the following refi benefits:
- The eligibility to waive off appraisal
- Opportunity for homeowners with low equity to refi
- Lower interest rates
- Typically does not require additional proof of income documentation
- Get a refund on your Upfront MIP that you originally paid
- All FHA loans with a closing date of June 1, 2009 may be eligible for a reduction in mortgage insurance premiums
- Faster closing time
The FHA streamline refinance program has been helping homeowners lower their rate for a few years and is considered to be one of the easiest refinance processes available today.
Most of the time, the FHA streamline guidelines say that no new appraisal is required (the original loan price is used), no new credit review is required, no verification of employment or income is required, and no cash back is allowed. But don’t be confused – just because the government guidelines say one thing doesn’t mean that lenders aren’t requiring another. Many lenders have additional requirements that demand additional requirements such as appraisal, credit verification, etc.
The Nature of MIPs
There are two forms or mortgage insurance premiums that are collected by the FHA:
(I) Upfront Mortgage Insurance Premium, UMIP
– equal to 1.75 percent of the mortgage amount. This cost can either be wrapped into the loan or paid directly
(II) Annual Mortgage Insurance Premium, AMIP
– under the new cut, it will be equal to 0.60 percent of the outstanding loan balance for most FHA borrowers who have a loan amount less than $625K. This type of mortgage insurance premium is payable every month. The amount of your annual MIP is determined by your loan-to-value ratio, the base loan amount, as well as the term of the mortgage
FHA Streamline Rates
Just like interest rates from other mortgage products, the FHA streamline refinance rates change every day. To see an average of what interest rates are being quoted today, type your zip code in over on the right hand side to see what lenders are offering in your area.
FHA Streamline Credit Score Requirements
Many people ask if FHA requires a minimum credit score when doing an FHA streamline refinance and the short answer is “yes” but it will vary by lender. Lenders may carry different minimum credit score requirements for the FHA streamline program.
If you aren’t sure what your credit score is exactly, there are online tools available that can help you obtain a copy of your report. The agencies are obliged to give you a copy of your report per year, or you can enlist the help of a lender.
FHA Streamline Appraisal Requirements
There are two types of FHA streamline programs – the “FHA streamline with appraisal” and the FHA streamline without appraisal” programs. The FHA streamline without appraisal program may be an ideal solution for people who currently owe more than their home is worth and don’t want to hassle with a loan modification.
Getting The Right Mortgage Product
If you are only going for a rate/term refi to lower your monthly payments and do not want to tap into your home’s equity, an FHA Streamline Refinance is the best option for you. Start shopping and comparing offers by different lenders. Before you apply, do as much research as you can so by the time you confer with the lender, you can get answers for your most important concerns.