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FHA Streamline

FHA streamline refinances emerged onto the mortgage scene in the early 1980's. Since then, thousands of FHA home owners have utilized this program to lower their interest rate with fewer costs and relative ease.

FHA streamline refinance refers only to the amount of documentation and underwriting that is conducted on a loan file by the mortgage company. Mortgage companies may offer FHA streamline refinances at "no cost" (actually no out-of-pocket expenses to the borrower) by charging a higher interest rate on the new loan. Other companies may offer streamline refinances that wrap the costs into the new mortgage amount. Unfortunately, there must be sufficient equity in the property. Before deciding which option best fits your needs, it is important to weigh not only the costs but also the long term impact that a higher rate or a higher mortgage payment will have.

FHA streamline do not require credit underwriting, unless the principal balance is increasing, in which case, HUD requires a 12 month payment history. New individuals may be added to title on a streamline refinance without credit review. Deleting individuals from title on a streamline refinance may require qualification (certain exceptions may apply).

The following are basic requirements of a FHA streamline:

• The mortgage to be refinanced must already be FHA insured.
• The borrower must have been making the mortgage payments on time.
• The refinance must lower the principal and interest payment of the previous mortgage payment.
• The borrower may not receive cash from loan proceeds.
• Any subordinate financing may remain in place as long as it is subordinated on title.
• The loan must have owned the property and had the FHA mortgage for at least six months to be eligible.
• The term of the new mortgage must be the lesser of 30 years or the unexpired term of the mortgage plus 12 years. A borrower cannot refinance from a 15 year loan to a 30 year loan
• An appraisal is not required unless the closing costs are wrapped into the loan. Streamline refinances without an appraisal are limited to the unpaid principal balance, minus 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.

Debt

Debt is a word your FHA loan officer uses to describe any situation that you borrow money. "Too much debt" is how the industry describes situations where people borrow more money than they can easily repay. There are a lot of types of debt: credit card debt, department store debt, charge accounts, auto loans, student loans, mortgages, and money that you may owe the Internal Revenue Service. You might also borrow from parents, relatives, and friends, although those debts may not be reflected in your credit report.

Your ability to borrow more money or to have your credit extended is directly reflected by how much debt you carry. Mortgage lenders, for example, determine your purchasing ability by applying a debt-to-income ratio (a ratio that is calculated by totalling your monthly debt payments plus the proposed monthly debt payment divided by your gross monthly income). Too high of a debt-to-income ratio reflects greater risk with the loan and may result in rejection of the credit application. Most mortgage lenders will allow you to pay up to 42 percent of your gross monthly income in debt service. Of course this may vary depending upon the loan size, the type of loan, and the type of property you are purchasing.

FHA Credit Issues

General FHA guidelines regarding a person credit history

FHA guidelines Full Article.

First Time Homebuyer

Owning a home can be a significant first step in attaining financial independence. We can help you eliminate rent payments, build equity, and feel the personal satisfaction of calling a home your own. With our Mortgage Guarantee, you can have a pre-approved mortgage amount before you decide on the home you want. Your pre-approved mortgage provides you the buying power of a cash buyer.

First Time Homebuyer