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The FHA has had a program involving streamlined refinance options since early 1980s. The programs is designed for less documentation and a speedier approval process.
What is the FHA Streamline Refinance program?
The FHA streamline finance program refers to the amount of paperwork and documentation performed by the underwriter of the loan. The net effect of this program permits you to reduce the interest rate on your FHA mortgage loan quickly. The FHA streamline finance program will usually allow you to refinance without getting a new home appraisal as long as the new amount does not exceed the old loan amount. For more general info on FHA loan requirements see this article titled: FHA loan requirements.
Requirements and highlights of the FHA Streamline Refinance.
- Should you refinance your home mortgage?
- The original home mortgage must be an FHA loan.
- The FHA loan must be in good standing.
- The refinancing must result in a lowering of both the principal and interest.
- No appraisal is required.
- No credit check is required.
- You must have owned the property for at least six months before you can refinance.
Other points to consider with FHA Streamline Refinance.
- There is no cash back option for FHA streamline refinancing.
- You don't have to use your current bank, but you must use an FHA approved lender.
- You can include any closing costs into the loan, but you must have enough equity in your home to include these extra costs.
FHA Streamline 203K Loan
The FHA streamline 203K loan is designed for homeowners who want to make home improvements to their FHA financed home. The FHA 203k loan is quite similar to the normal FHA streamline refinance mentioned above. Below we have highlighted the differences:
- You must use at least one qualified contractor. Remodeling by the homeowner is generally not allowed.
- You must get a detailed estimate from the contractor that includes all costs.
- The contractor must sign an agreement to perform all the work at the cost estimated and in the time alloted in the estimate.
- The maximum loan amount is $35,000 and the minimum amount is $5,000.
- You cannot use the FHA 203k loan for major structural improvements.
Qualifications for FHA loans vary by location. If you are interested in an FHA loan, Lending Tree has recently expanded its service to allow borrowers looking for new loans or refinancing to check their eligibility for FHA loan programs based on their local county-level loan limits and loan-to-value ratios.
You can find out more information about FHA Streamline Refinance at the HUD website: www.disasterhousing.gov/offices/hsg/sfh/buying/streamli.cfm
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