If you currently have an FHA mortgage, you may be eligible for an FHA Streamline Refinance.

From the HUD webpage

Streamline refinance refers to the refinance of an existing FHA-insured mortgage requiring limited borrower credit documentation and underwriting. Streamline refinances are available under credit qualifying and non-credit qualifying options. “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.

The basic requirements of a streamline refinance are:

  • The mortgage to be refinanced must already be FHA insured
  • You must have had the FHA mortgage for at least 6 months
  • You made at least the last 6 months of mortgage payments on time
  • The refinance results in a net tangible benefit to the borrower. This could mean a lower interest rate.
  • You may receive a refund on previously paid mortgage insurance premiums.

You are not permitted to take more than $500 from your mortgage when you opt for a streamline refinance. There are no cash out options available with this loan, but the FHA does have a cash out mortgage.

The FHA Streamline works like any other refinance program.

You can use it to refinance a 15 or 30 year term, and there is no prepayment penalty. You can extend a 15 year loan into a 30 year loan, which can significantly lower your monthly payments. However, you may not reduce a 30 year loan to a 15 year loan.

One of the most beneficial factors in getting an FHA Streamline Refinance is that there is no appraisal requirement. You can refinance to a lower interest rate even if you owe more than your home is worth. As of this writing, the FHA Streamline Refinance rules

  • Do not require employment verification
  • Does not require income verification
  • Does not require credit score verification

Is an FHA Streamline right for you?

The FHA does not allow the loan balance to increase in a Streamline Refinance. That means that all costs:

  • origination fees
  • title changes
  • prepaid taxes
  • prepaid insurance

must be paid by the borrower at the closing or credited by the loan officer (known as a no-cost FHA Streamline).

Remember, the FHA does not originate loans, it only insures them. Work with your mortgage broker to find a loan that is best suited for your financial and lifestyle needs