As the credit crisis has tightened, many lenders have started requiring a certain credit score (580, 620, etc.) if you wanted to participate in the FHA streamline refinance program. Many lenders have… but at least one lender has not.
You see – the FHA streamline refinance program was originally designed to allow people who are currently in an FHA loan to be able to lower their interest rate and get a new FHA loan with as little hassle as possible. This is where the term “streamline” comes in – because the documentation is supposed to be minimal — or streamlined.
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So – when a lender tells you that a minimum credit score is required on an FHA streamline refinance, it is not FHA that is setting up that rule, it is the lender who has that rule. FHA will insure a streamline with no credit score – only a verification that you haven’t violated the criteria for late payments in the last 12 months.
The 3 main criteria that anyone must meet in order to be eligible for the FHA streamline program are:
You must live in the property
You can’t have more than 2 30 day late payments on your loan in the last 12 months
The benefits of the transaction must outweigh the costs of the transaction – also known as the “net tangible benefit” test.
Can the FHA streamline program help you lower your mortgage payment and put you in a better overall financial situation? Be sure to speak with a FHA streamline expert to find out.