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How Do I Know if I Qualify for an FHA Streamline Refinance?

Posted on August 26 By Michele Lerner

One of the benefits of having an FHA loan is the opportunity to refinance with the FHA Streamline Refinance program. In April 2011, the FHA loosened its guidelines and made it much easier for borrowers with an existing FHA-insured loan to refinance. Then, in 2012, the FHA made refinancing even more attractive for some FHA borrowers by lowering the mortgage insurance rates.

Benefits of the FHA Streamline Refinance program:

  • Appraisals are not required. Since you do not need an appraisal, you can still qualify even if you are underwater on your mortgage.

  • No employment verification. You can be approved for an FHA Streamline Refinance even if you are unemployed.

  • No income verification. You do not have to provide paystubs, W-2s, or tax returns to be eligible for an FHA Streamline Refinance.

  • No credit score verification. The FHA looks at your payment history -- not your credit score -- to gauge how you will handle debts in the future.

Keep in mind that some lenders will add "overlays" or additional requirements above the FHA's eligibility guidelines, so you may need to meet a minimum credit score or some other requirement to qualify.

FHA Requirements for Streamline Refinance eligibility:

  • Be current on your mortgage. You must have 12 months of on-time, in-full mortgage payments on your current FHA loan.

  • Waiting period between refinances. Before you can refinance, you must have made at least six mortgage payments on your current FHA-insured loan and at least 210 days must have transpired from the last closing date as well.

  • Refinancing must provide a "Net Tangible Benefit." Either your monthly principal, interest and mortgage insurance payment must decrease by 5 percent or more or you need to be refinancing from an adjustable-rate mortgage to a fixed-rate FHA loan.

The amount you'll pay in mortgage insurance on an FHA Streamline Refinance varies according to when you closed on your current home loan. In your case, because you closed prior to June 1, 2009, you'll pay reduced rates of 0.01 percent of your loan balance for your upfront mortgage insurance and 0.55 percent in annual mortgage insurance.

Consult several lenders to find out whether you qualify for an FHA Streamline Refinance and to see how it could benefit you.

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