FHA Refinancing

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FHA Streamline Refinancing

The "streamline" refers only to the amount of documentation and underwriting that needs to be performed by the lender, and does not mean that there are no costs involved in the transaction. The basic requirements of a streamline refinance are:

• The mortgage to be refinanced must already be FHA insured for at least 6 months.

• The mortgage to be refinance should be current (not delinquent).

• The refinance must result in a lowering of the borrower's monthly principal and interest payments.

• No cash may be taken out on mortgages refinanced using the streamline refinance process.

• No cash may be taken from the proceeds by the borrower.

• Subordinate financing may remain in place as long as it is subordinated on the title.

• The new term of the loan must be the un-expired term of the mortgage plus 12 years, not to exceed 30 years. A 15 year loan cannot be refinanced to a 30 year loan.

• Appraisals are not required unless the closing costs are included in the loan. Otherwise, streamline refinances are limited tot he unpaid principal balance, less any refund credit of the mortgage insurance premium (MIP), plus the new upfront MIP if it is to be financed in the mortgage.

• No termite report is required.

• The borrower cannot be late, delinquent, or in default of any federal debt (i.e., student or VA loans).

Lenders may offer streamline refinances and include the closing costs into the new mortgage amount. This can only be done if there is sufficient equity in the property, as determined by an appraisal. Streamline refinances can also be done without appraisals, but the new loan amount cannot exceed the original loan amount. Investment properties (properties in which the borrower does not reside in as his or her principal residence) may only be refinanced without an appraisal.

FHA Cash Out Refinancing | Top | Apply Now |

Cash out refinancing is used when borrowers want to pull out more than they owe to take advantage of the built up equity in their home. The borrower is limited by the value of the property compared to the loan amount (i.e., loan-to-value or LTV). 

Here are the basic requirements of an FHA Cash Out refinance:

• Applies to owner occupied properties only.

• Loan amounts can not exceed the maximum loan limits for the area.

• Borrowers must credit qualify.

• 2nd mortgages can be paid off with a cash out refinance but the 2nd mortgage must be at least 12 months old.

• Borrowers may be eligible for a refund on any unused portion of the mortgage insurance premium (MIP) and the new mortgage may require a new upfront MIP.

• If the purpose of the refinance is to buy out the equity of an ex-spouse, a divorce decree or settlement agreement must be provided to document the equity awarded to the ex-spouse.

• If the property was purchased more than 1 year before the refinance, 85% of the appraised value plus the allowable closing costs can be cashed out.

• If the property was purchased less than 1 year before the refinance, a cash out of 85% of the sales price plus the allowable closing costs OR the appraised value plus the allowable closing costs (whichever is less).