FHA mortgages have always been very good loans for the
homebuyer. In today's market the FHA refinance programs
offer maximum benefits to the homeowner that wants to lower
payments or get out of an adjustable rate mortgage. FHA
offers three types of refinance mortgage loans: Cash-Out,
No Cash-Out, and Streamline Refinance.
Streamline refinances were designed to lower monthly
payments on FHA mortgages only. They can be done with or
without an appraisal, and with or without credit
qualification. The streamline refinance does not allow for
any cash back to the borrower.
Loan Type Conversion Allowed:
1. 30 yr fixed to 30 yr fixed: The new payment must be
lower than the old payment.
2. 30 yr fixed to 15 yr fixed: New payment cannot be more
than $50 higher. Note: 15 yr fixed to 30 yr fixed is not
allowed.
3. Fixed Rate to ARM: Owner occupied homes only
4. ARM to Fixed Rate
5. ARM to ARM: Rate must be lower than current loan
6. 203K to 203B
Streamline Refinance "Without" An Appraisal:
The new loan amount cannot be more than the original loan
amount, OR more than the current principle balance plus
closing cost. ... Which ever is less. This only applies
to owner occupied as non-owner occupied borrowers can only
refinance the existing balance do not have the option of
rolling in the closing costs.
The only credit verification required is a verification of
mortgage payments. This can be done with 12 copies of
cancelled checks, front and back. IF cancelled checks are
available, no in-file report is required unless the
underwriter prefers that method to verify mortgage payments.
Streamline Refinance "With" An Appraisal:
An FHA streamline refinance with an appraisal allows the
borrower to finance in the closing costs, discount points,
and prepaids provided it all fits within the loan to value
limits. The new loan amount may be the current principle
plus closing costs, discount points and prepaids, OR, the
appraised value x 97.75% (97.65%, or 97.15%, high or low
cost state). Which ever is less!
IF the smallest of these two values is greater than the
original mortgage balance credit verification is required.
Streamline Refinance - "Credit Qualifying":
The loan amount is calculated based on the previous
formulas and qualifying requires full employment
verification, credit report, and debt to income ratio
compliance. Typically these loans are used when the new
mortgage payment will be higher, deletion of a borrower on
new mortgage, or in assumptions involving due-on-sale
clauses.
FHA "No Cash Out" Refinance:
This regular no-cash-out loan may be used to refinance an
FHA mortgage, VA mortgage, or a conventional mortgage and
requires the borrower to fully qualify. Second mortgages
may be included in the new loan if they are older than one
year or you can prove that the funds were used solely to
repair or rehabilitate the home. If not, paying off or
including these loans would be considered a cash-out
refinance.
This loan can be used to buy out the equity of an ex-spouse
provided it is documented in the divorce papers. It is
still considered a no-cash-out because this equity is
considered indebtedness.
IF the property was purchased less than a year ago and is
not currently an FHA loan, the loan amount will be the
appraised value plus closing cost, OR the original sales
price plus closing cost. Which ever is less!
If the purchase was more than a year ago and not currently
FHA, the loan amount would be calculated the same as a
"streamline refinance with an appraisal".
FHA "Cash Out" Refinance:
This loan can be used to refinance an FHA loan, VA loan, or
Conventional loan. This loan has many advantages: Max
loan to value is 75% for conventional loans but FHA loans
allow 85% plus a portion of the closing costs.
The property must be owner occupied and the borrower must
fully qualify.
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Connie Sanders is available to answer any mortgage
questions you have and can be reached from her web sites at
http://www.fha-mortgageunderwriters.com or
http://www.fsbobasics.com
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