Sometimes, homeowners need extra money to finance large expenses such as a new addition to the house. One common way of financing these types of projects is to obtain a loan based on the equity in the home. Homeowners who have FHA-backed loans have the option of obtaining a FHA streamline loan. The FHA streamline program does not allow them to withdraw an amount in cash, but the FHA streamline refinance will give them a way to save more of their money every month.

What is an FHA Streamline Refinance?

FHA streamline refers to the ease with which the lender can approve the refinance. The FHA streamline loan may be granted without the necessity of an appraisal. The lender also does not have to do as much paperwork. Both these facts cut down on the time it takes to go through the process and saves the borrower a lot of money.

The FHA Streamline Refinance has been around since since the 1980s. A Streamline Refinance is the much like a normal rate/term refinance, but with reduced paperwork. It does not eliminate the fees or costs associated with refinancing, however, some fees and costs may be reduced because of the reduced paperwork and requirements that must be met.

  • What are the basic requirements for an FHA Streamline Refinance?
  • The mortgage to be refinanced is FHA insured. 
  • The borrower has not missed a payment.
  • After the streamline FHA refinance, the borrower’s monthly interest and principle will be lower.
  • The borrower will not obtain cash from the transaction

How much can I refinance with an FHA Streamline Refinance?

There are a couple of factors that determine the maximum Streamline loan amount.

  • Maximum Loan Amount: The maximum FHA Streamline loan amount varies from county to county. The highest maximum FHA streamline limit right now is $729,750. The lowest limit in any area is $271,050. You can view FHA Streamline limits for your area at: https://entp.hud.gov/idapp/html/hicostlook.cfm.
  • Maximum financing: The maximum loan-to-value (LTV) financing for an FHA Streamline Refinance (No Cash-Out) is 97.75% of either the appraised value of the home with a new appraisal or the previous FHA loan amount.

FHA Streamline Refinance Fees

It’s possible for homeowners to obtain a FHA streamline refinance without charging any fees up front. These lenders will add the fees they would have charged to the FHA streamline refinance rates. The result will be higher monthly payments for the FHA streamline refinance loan.

FHA Streamline Credit Requirements

In order to obtain the best terms possible, homeowners may want to check their credit reports first. If their credit scores are on the low side, they will receive the least favorable FHA streamline refinance rates. They can improve their chances of receiving better rates by taking some time to improve their credit scores. If there are any errors on their reports, they can take the initiative to correct those errors. They can also make sure that they do not pay any bills late so that there will be no reason for their credit scores to be affected negatively.

Learn more about FHA Refinance.

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