Articles Tagged With: FHA Streamline Requirements

March 7, 2014

FHA Streamline Refinancing: “Net Tangible Benefits”

Recently we posted about FHA streamline refinance loan options. FHA streamline loans are for existing FHA mortgages and feature no money back to the borrower. That means there is no FHA-required credit check or appraisal, though the lender may require one. FHA Streamline Refinancing rules as printed in HUD 4155.1 state that in most cases an FHA streamline refinance must result in a “net tangible benefit” to the borrower. What does this mean and how can a borrower know what those benefits will be? HUD 4155.1 Chapter Six says, “The lender must determine that there is a net tangible benefit to the borrower as a result of the streamline refinance transaction, with or without an appraisal. Net tangible benefit is defined as • a 5% reduction to the principal and | more...

March 6, 2014

FHA Streamline Refinances–What’s Possible?

By Joe Wallace

FHA Streamline refinancing loans are for existing FHA mortgages. They feature no FHA-required appraisal in most cases, and there is no FHA-required credit check in most cases. Some borrowers who want to apply for this type of FHA refinance loan may wonder if the transaction they have in mind is possible under the rules of the FHA loan program. For example, some borrowers want to refinance from a conventional mortgage to an FHA refinance, which is not possible under the FHA Streamline program (but is under FHA Cash-Out Refinancing). What transactions ARE permitted? According to HUD 4155.1, Chapter Six, Section C under the heading “Types Of Permissible Streamline Refinances” we find a list of the following: • no cost refinances • ARM to ARM refinancing • ARM to fixed rate | more...

September 11, 2013

FHA Loan Rules Updated: Maximum Loan Amounts For Streamline Refinancing

By Joe Wallace

The FHA and HUD have updated some of the rules used to calculate maximum mortgage loan amounts for FHA Streamline Refinancing loans. According to Mortgagee Letter 2013-29, there are new guidelines to lenders on how the maximum amount is calculated, and what can be included in the loan amount when calculating the mortgage amount. “Mortgagees are reminded that when processing an FHA-insured streamline refinance mortgage, the new maximum mortgage amount must always be calculated starting with the outstanding principal balance on the existing mortgage, not with the payoff amount for the existing mortgage.” Borrowers should know the difference between the outstanding balance and the payoff amount. According to the Consumer Financial Protection Bureau (CFPB) official site, “Your payoff amount is how much you will actually have to pay to satisfy | more...

July 17, 2013

FHA Streamline Refinance Loans: Adding or Deleting Borrowers To The Title

By Joe Wallace

When borrowers with existing FHA mortgages want to apply for streamline refinancing, one question that sometimes comes up is whether or not a borrower is permitted to add or delete someone from the title of the loan at the time of refinancing. FHA loan rules do address this issue. Those rules are found in HUD 4155.1, Chapter Six, Section C under a section titled Borrower Additions or Deletions to the Title on a Streamline Refinance. The concern for some borrowers is whether or not adding or deleting someone might trigger the due-on-sale clause making the entire loan amount payable according to the terms of the clause. The FHA does permit additions and deletions to the title as described in Chapter Six: “Individuals may be added to the title on a | more...

July 17, 2013

Credit Qualifying FHA Streamline Refinances

By Joe Wallace

FHA Streamline Refinances are designed to lower a borrower’s monthly payments and/or get a lower interest rate. For many borrowers this is a no-appraisal/no new credit application type of loan. But in some cases, a borrower’s payments may actually increase with a streamline refinance loan depending on whether permitted add-ons are included in the loan amount. In cases where the payments increase to 20% or more, there is a credit-qualifying requirement for the new loan. This requirement is found in the FHA loan rules for Streamline Refinancing loans, which say: “A credit qualifying streamline refinance must be considered when a change in the mortgage term will result in an increase in the mortgage payment of more than 20% when deletion of a borrower or borrowers will trigger the due-on-sale clause | more...

June 14, 2012

FHA Loan Questions: Can The Lender Include Closing Costs Into My Streamline Refinancing Loan?

By Joe Wallace

A reader asks, “I’m in the beginning process of doing a FHA streamline refi and from the articles I’ve read “FHA doesn’t allow lenders to include closing costs in the new mortgage amount of the streamline refinance.

May 3, 2012

What is an FHA Streamline 203(k) Mortgage?

By Joe Wallace

There are many options with FHA home loans, including something called the FHA Streamline 203(k), which the FHA official site describes as follows: “The ‘Streamline’ (K) Limited Repair Program permits homebuyers to finance an additional $35,000 into their mortgage to improve or upgrade their home before move-in. With this product, homebuyers can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or FHA appraiser.” This is good news for borrowers who know their FHA appraisal requires certain improvements or corrections–it’s an option to consider if there’s a sticking point in negotiating such changes with the seller. Additionally, “…like the regular Section 203(k) program, Streamlined (k) is available: To augment an FHA Energy Efficient Mortgage (EEM), To insure the | more...

November 9, 2011

FHA Streamline Loan Basics

By Joe Wallace

FHA insured loans have been eligible for Streamline Refinancing since the early 80s. According to the FHA official site, there are some common misconceptions about Streamline Loans that FHA borrowers and home owners should know before applying for these refinancing loans. For example, “Streamline” refers to the reduced amount of paperwork, qualifying requirements and other details involved in these mortgages. It does not mean there are no costs to the borrower or that no money will be paid out of pocket for an FHA Streamline mortgage. Borrowers do have the option of including costs of the loan into the mortgage, but that can seriously change the way the loan is handled if including those costs increases the loan amount too much. What are the basic requirements for an FHA insured | more...

October 24, 2011

FHA Streamline Refinancing Rules: Adding and Removing Borrowers

By Joe Wallace

When an FHA borrower wants to refinance an FHA mortgage using FHA streamline refinancing, there are sometimes questions about adding or removing a borrower from the title. This may be needed for several reasons. If a borrower is getting a divorce, for example, refinancing the property under a single name would make sense. The same goes for a single borrower who is refinancing in connection with getting married–he or she might want to add the spouse to the title. When does the FHA allow the borrower to add or remove another person to the title during an FHA streamline loan? According to the FHA official site, adding a borrower is simple. “Individuals may be added to the title on a streamline refinance without a credit worthiness review, and triggering the | more...

September 29, 2011

FHA Loan Questions: What Is The Maximum For An FHA Streamline Refinance Loan?

By Joe Wallace

FHA rules for Streamline Refinancing Loans changed in 2011, and there are updated guidelines borrowers and lenders need to know when trying to determine what the maximum loan amount might be for a particular borrower. Under the old rules (for cases assigned before April 18, 2011) there were two sets of guidelines. One set was for FHA streamline refinancing without an appraisal. For these loans, the old system allowed refinancing maximums that did not exceed the principal outstanding balance, minus any up front mortgage insurance premium refund, plus the amount of the new up front mortgage insurance premium (UFMIP). The old FHA streamline limits also included a “with appraisal” maximum which was based on the lower of the outstanding principal balance minus any UFMIP refund, plus closing costs and prepaid | more...