The Streamline FHA Refinance

Today, I thought it would be a good idea to talk about a mortgage loan program that is truly a smooth and easy program and is still available in today’s mortgage world. This program is the Streamline FHA refinance without an appraisal.

The streamline FHA refinance without an appraisal is when we refinance an existing FHA customer and place them back into a new FHA loan. Even if the borrower is only taking their interest rate down 1%, a smart borrower should consider this loan because there are a few less closing costs associated with this mortgage loan. The streamline refinance is relatively easy because there is less documentation than your typical FHA loan. We still have a lot of paperwork but there is no appraisal, no proof of income, no proof of assets and no credit report. The application still has to reflect correct names and dates of employment as well as the details of the transaction.

There are a few key ingredients necessary for a streamline FHA refinance. The new mortgage has to less of a loan amount than the old mortgage. The mortgage history has to be paid on time and there is no cash out to the borrowers at closing.

This loan allows for the loan officer to pay closing costs if the cash to close is tight. He or she can structure the transaction a little differently to make it work for the borrower’s bottom line. For example, if the prevailing FHA interest rate is 5%, the mortgage loan officer can provide 5.25% and pay $1500 in closing costs to help the borrower avoid writing a check at closing. Just like the way we can look at a no closing cost loan in the conventional world, the loan officer can pay closing costs to make the break-even point less.

The FHA streamline refinance helps customers who may be upside down on their home value still improve their situation because there is no appraisal requirement. So customers who have been sitting on the fence with rates in the sixes should look at this loan opportunity. As long as the new mortgage loan amount is less than the old loan amount, the payment drops by at least $50, and the FHA customer has a good mortgage history, we can do this loan.

Written by Preston Ware
First South Mortgage
Tel: 704-542-8057
* www.prestonware.com
Email is preston@prestonware.com.