In this blog, we will discuss and cover the HUD guidelines on FHA streamline refinance mortgage loans. HUD Guidelines On FHA Streamline Refinance Mortgages is very simple and can be closed in two weeks: Here is the HUD Guidelines on FHA streamline refinance mortgage requirements:
No appraisal required. No income verification required so debt-to-income ratios do not matter. No credit requirement nor credit scores and no closing costs on FHA streamline refinance mortgage loans.
All that is required is that the borrower be timely on just their current FHA Loan monthly payments for the past 12 months. Borrowers can have derogatory credit and late payments on all other credit tradelines with the exception of their current FHA home loan. HUD Guidelines on FHA streamline refinance mortgage requires very little paperwork. Most banks and lenders have overlays but Gustan Cho Associates specializes in no overlays on government and conventional loans so we just follow HUD Guidelines on FHA streamline refinance mortgage.
No Credit Score Requirements on FHA Streamline Refinance Mortgage
What are the credit requirements under HUD Guidelines on FHA streamline refinance mortgage? The only credit requirement under HUD Guidelines on FHA streamline refinance mortgage is that borrowers need to be timely on their mortgage payments for the past 12 months. Borrowers can be late on car payments, credit card payments, installment loans, and other types of credit and still qualify for FHA streamline refinance mortgage. BUT borrowers need to be timely on their current FHA loan for the past 12 months.
An FHA streamlined refinance mortgage is a refinancing option designed for homeowners with existing FHA mortgages. It allows borrowers to refinance their current FHA loan into a new one with a lower interest rate and reduced monthly payments without requiring a complete credit check or appraisal. Speak With Our Loan Officer for Mortgage Loans
Key Features and Requirements of an FHA Streamline Refinance Mortgage
Unlike a traditional refinance, an FHA streamlined refinance typically requires less paperwork. Borrowers may not need to provide income verification or have their credit re-evaluated. FHA streamline refinance mortgage often have lower closing costs than traditional refinances because they skip some steps like a full appraisal. FHA streamline refinance mortgage loans primarily help borrowers reduce their monthly mortgage payments. As such, they generally don’t allow borrowers to take out cash from their home equity. However, they can still include the outstanding principal balance, accrued interest, and upfront mortgage insurance premiums.
Existing FHA Loan Requirement
To be eligible for an FHA streamline refinance, borrowers must already have an FHA loan. This type of refinance is not available for conventional loans or mortgages insured by other government agencies. Borrowers must have made their existing FHA mortgage payments on time for the last twelve months to qualify for an FHA streamline refinance.
Net Tangible Benefit
Borrowers must demonstrate a “net tangible benefit” from the refinance, such as a reduction in their monthly payment or switching from an adjustable-rate mortgage to a fixed-rate mortgage.
While FHA streamline refinances may not require a new appraisal, borrowers are still typically required to pay an upfront mortgage insurance premium (UFMIP), along with ongoing mortgage insurance premiums (MIP).
Speaking with a mortgage lender or financial advisor is essential to determine if an FHA streamlined refinance is the right option for your specific financial situation and goals.
Seasoning Requirements Between Refinancing FHA Loans
Mortgage interest rates are determined by credit scores. Homebuyers with 580 credit scores will get higher mortgage rates than borrowers with 700 FICO credit scores. Homebuyers who purchase a home with 580 credit scores will get higher mortgage rates and once their credit scores improve, they will want to do an FHA Streamline Refinance with a lower credit score. FHA lenders under HUD Guidelinesrequire that borrowers make six payments from the closing of their home purchase in order to qualify for a Streamline Refinance Mortgage.
Reasons To Refinance With Streamline
Here are the seasoning requirements on streamline refinances: Six months of payments from the time of their home closing. 210 days have passed from the borrower’s most recent home closing date. Timely payments on all of their mortgage payments for the past 12 months: Or six months if it was a recent home purchase. Borrowers can apply and get approved for a streamline refinance FHA loan. However, they cannot close the mortgage until after the 210th day.
What Are The Net Tangible Benefit on HUD Guidelines on FHA Streamline Refinance Mortgage?
In order to do any refinance mortgages, there needs to be a net tangible benefit to the borrower or the lender is not allowed to proceed with a refinance mortgage. One of the borrowers will need to state the reason why they are proceeding with a refinance mortgage.
What Borrowers Cannot Do With an FHA Streamline Refinance Mortgage
Borrowers are not allowed to do a cash-out loan with an FHA streamline refinance mortgage. Borrowers who need cash-out refinance mortgages need to do a full refinance mortgage and the maximum cash out allowed is 80% loan-to-value. All original borrowers, including non-occupant co-borrowers, need to be on the new streamlined loan. Main borrowers cannot add new co-borrowers or take out old co-borrowers with a streamline loan.
Closing Costs on FHA Refinance Mortgage
Homeowners who go through traditional refinance mortgages are used to rolling in the closing costs to the balance of the mortgage loan. However, since FHA Streamline Refinance mortgages do not require home appraisals, HUD does not allow loan balances to be increased. Therefore, borrowers are not allowed to roll closing costs into their new FHA loan. Here Is how closing costs on FHA streamline refinance mortgage work: The new mortgage balance is restricted as follows:
Principal Mortgage Balance plus Upfront FHA MIP
Other closing costs such as pre-paid, title charges, transfer stamps, legal fees, homeowners insurance, recording charges, and other costs/fees either needs to be paid by the borrower or credited by the lender via a lender credit
All closing costs are credited by lender credit by refinance lenders
Borrowers can normally skip one or two mortgage payments on FHA Streamlines
HUD Guidelines on FHA Streamline Refinance Mortgage and Role of FHA
The Federal Housing Administration is like a private mortgage insurance company. HUD is the parent of FHA and we will be discussing and covering the role of HUD and FHA in this article. HUD’s role is to promote homeownership to hard-working Americans. FHA is not a lender but a government mortgage insurance agency. It insures FHA Loans that are originated by private mortgage companies if borrowers default on their FHA-insured mortgage loans. FHA is the most popular mortgage loan program today with low credit and debt to income ratio requirements.
Can I Qualify For FHA Loans with Outstanding Collections and Charged-Off Accounts?
Homebuyers and refinance borrowers do not have to pay outstanding collections and charge off accounts to qualify for FHA loans. Homebuyers can qualify for FHA Loans with a 3.5% down payment. Homebuyers with credit scores under 580 and down to a 500 FICO can qualify for an FHA loan with a 10% down payment.
HUD Guidelines on FHA Streamline Refinance Mortgage With Lower Credit Scores
To qualify for a 3.5% down payment FHA mortgage, 580 FICO credit scores are required. Homebuyers with under 580 FICO need 10% down payment and refinance borrowers need 90% Loan To Value. HUD allows up to 46.9% front-end DTI and 56.9% back-end DTI on borrowers with at least 620 credit scores. Under 620 FICO, the maximum allowable DTI is 43%. Apply for FHA Streamline refiance mortgage with low credit scores, click here
FHA Loans After Chapter 13 Bankruptcy Discharged Date
No Waiting Period After Chapter 13 Bankruptcy Discharged Date. Borrowers can qualify for FHA Loan one year into a Chapter 13 Bankruptcy repayment plan with Trustee Approval. Two year waiting period after Chapter 7 Bankruptcy discharged date. Three year waiting period after foreclosure, deed in lieu of foreclosure, and short sale
Using Non-QM Loans as an Alternative to FHA Loans
Non-QM Loans available for borrowers who do not meet the waiting period after bankruptcy and foreclosure. No waiting period after bankruptcy and foreclosure with non-QM loans.
Qualifying For FHA Streamline Refinance Mortgage
If you have a current FHA Loan and want to see how much money you can save with an FHA Streamline Refinance, contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us email@example.com. Remember that homeowners can skip one to two month’s mortgage payments and save on their monthly mortgage payments with a streamline refinance. Plus, we cover all of the closing costs with a lender credit. Click here to qualify for FHA Streamline Refinance mortgage