Saturday, March 10, 2012

What is an FHA Streamline Loan

FHA Streamline Loans

If you’ve recently applied for an FHA insured mortgages and are now paying on an FHA mortgage, you are also able to submit an application for FHA Streamline Refinancing loans after a specified waiting period.

Streamline Refinancing features reduced paperwork and underwriting requirements for qualified borrowers, and can much easier to obtain compared to other refinancing options including cash-out refinancing loans and similar transactions.

For qualified borrowers, now could be the best time to consider refinancing an FHA guaranteed mortgage. Streamline Refinancing offers many benefits including lower monthly payment, lower interest rates, or both-- with some exceptions.

For example, are you refinancing from an adjustable rate mortgage to an FHA fixed-rate loan? Interest rates on the refinanced mortgage could be higher than the original variable rates.

Some borrowers with recently purchased homes wonder how soon after purchasing a home with an FHA mortgage can a home owner apply for streamline refinancing?

Recently updated FHA guidelines establish a timetable for how soon after purchasing a home the borrower can be considered for an FHA Streamline loan. The new rules require borrowers to wait a minimum amount of time--the “seasoning period”--and make a minimum number of payments before an FHA Streamline Loan application is submitted.

FHA Mortgagee Letter 2011-11 states, “On the date of FHA case number assignment…The mortgagor must have made at least six payments on the FHA-insured mortgage that is being refinanced…”

FHA rules also add a six-month requirement on top of the six payment rule. “At least six full months must have passed since the first payment due date of the refinanced mortgage, and…at least 210 days have passed from the closing date of the mortgage being refinanced.”

The new FHA Streamline Refinancing rules also spell out when to file an application for a streamline loan. “...if the FHA case number on the mortgage being refinanced was closed on or before December 1, and if mortgagor’s first payment on that mortgage was due on January 1, the mortgagee may request assignment of an FHA case number for the refinancing mortgage no earlier than July 1.”

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