FHA Streamline Refinance
This refinancing option is considered streamlined because it allows you to reduce the interest rate on your current home loan quickly and oftentimes without an appraisal. FHA Streamlined Refinance also cuts down on the amount of paperwork that must be completed by your lender saving you valuable time and money.
FHA has permitted streamline refinances on insured mortgages since the early 1980s. “Streamline refinance” refers only to the amount of documentation and underwriting that the lender must perform, and does not mean that there are no costs involved in the transaction.
Lenders may offer streamline refinances in several ways. Some lenders offer "no cost" refinances (actually, no out-of-pocket expenses to the borrower) by charging a higher rate of interest on the new loan than if the borrower financed or paid the closing costs in cash. From this premium, the lender pays any closing costs that are incurred on the transaction. FHA does not allow lenders to include closing costs in the new mortgage amount of a streamline refinance. Investment properties (properties which the borrower does not occupy as his or her principal residence) may only be refinanced without an appraisal.
FHA has permitted streamline refinances on insured mortgages since the early 1980s. “Streamline refinance” refers only to the amount of documentation and underwriting that the lender must perform, and does not mean that there are no costs involved in the transaction.
Lenders may offer streamline refinances in several ways. Some lenders offer "no cost" refinances (actually, no out-of-pocket expenses to the borrower) by charging a higher rate of interest on the new loan than if the borrower financed or paid the closing costs in cash. From this premium, the lender pays any closing costs that are incurred on the transaction. FHA does not allow lenders to include closing costs in the new mortgage amount of a streamline refinance. Investment properties (properties which the borrower does not occupy as his or her principal residence) may only be refinanced without an appraisal.
Streamlining Requirements: -The mortgage to be refinanced must already be FHA insured.
-The mortgage to be refinanced should be current (not delinquent). -The refinance results in a lowering of the borrower's monthly principal and interest payments, or, under certain circumstances, the conversion of an adjustable rate mortgage (ARM) to a fixed-rate mortgage. -No cash may be taken out on mortgages refinanced using the streamline refinance process. |
|
Special FHA Streamlining Option:
FHA Streamline Refinance MIP (For Loans Endorsed Before June 1, 2009)
If your existing FHA mortgage was endorsed prior to June 1, 2009, your mortgage insurance premiums have been "grandfathered". You can refinance via the FHA Streamline Refinance program and pay reduced rates for both for upfront MIP and your annual mortgage insurance premium.
Upfront Mortgage Insurance Premiums (UFMIP) For an FHA Streamline Refinance that replaces a loan endorsed prior to June 1, 2009, the new FHA mortgage's upfront mortgage insurance is equal to 0.01 percent of the loan size, or 1 basis point.
For example, if your new FHA Streamline Refinance is for $100,000 mortgage, the FHA will assess a $10 upfront mortgage insurance premium (MIP) to be paid by you at closing. The FHA automatically adds the $10 payment to your new loan balance.
Annual Mortgage Insurance Premiums (MIP) Annual MIP is similarly cheap for "old" FHA loans. For an FHA Streamline Refinance replacing an FHA loan endorsed prior to June 1, 2009, the annual MIP is 0.55% annually, or 55 basis points.
The complete annual MIP schedule is as follows :
For an FHA Streamline Refinance which replaces a FHA loan endorsed prior to June 1, 2009 and for which the mortgage is a jumbo FHA mortgage (i.e. loan size exceeds $625,500), no additional mortgage insurance premiums are due.
If your existing FHA mortgage was endorsed prior to June 1, 2009, your mortgage insurance premiums have been "grandfathered". You can refinance via the FHA Streamline Refinance program and pay reduced rates for both for upfront MIP and your annual mortgage insurance premium.
Upfront Mortgage Insurance Premiums (UFMIP) For an FHA Streamline Refinance that replaces a loan endorsed prior to June 1, 2009, the new FHA mortgage's upfront mortgage insurance is equal to 0.01 percent of the loan size, or 1 basis point.
For example, if your new FHA Streamline Refinance is for $100,000 mortgage, the FHA will assess a $10 upfront mortgage insurance premium (MIP) to be paid by you at closing. The FHA automatically adds the $10 payment to your new loan balance.
Annual Mortgage Insurance Premiums (MIP) Annual MIP is similarly cheap for "old" FHA loans. For an FHA Streamline Refinance replacing an FHA loan endorsed prior to June 1, 2009, the annual MIP is 0.55% annually, or 55 basis points.
The complete annual MIP schedule is as follows :
- 15-year loan terms with loan-to-value over 90% : 0.55 percent annual MIP
- 15-year loan terms with loan-to-value under 90% : 0.55 percent annual MIP
- 30-year loan terms with loan-to-value over 95% : 0.55 percent annual MIP
- 30-year loan terms with loan-to-value under 95% : 0.55 percent annual MIP
For an FHA Streamline Refinance which replaces a FHA loan endorsed prior to June 1, 2009 and for which the mortgage is a jumbo FHA mortgage (i.e. loan size exceeds $625,500), no additional mortgage insurance premiums are due.
