Streamline Refinance Mortgage Guidelines On VA And FHA Loans


This BLOG On Streamline Refinance Mortgage Guidelines On VA And FHA Loans Was PUBLISHED On January 9th, 2019

What is the improvement of refinancing the Guidelines for mortgage loans for VA and FHA loans

Streamline Refinance Mortgage Guidelines state that a homeowner can refinance their current home loans with an equivalent loan with limit docs with a fast track process.

  • Can only do a rate and term refinance
  • Cannot get any cash-out proceeds from the refinance
  • Borrowers need to get a net tangible benefit from the streamline
  • No appraisal or income documentation is required
  • Lower monthly mortgage payment 
  • No cash to close by homeowners when they do a streamline
  • Often, borrowers get to skip one month’s mortgage payment
  • Closings can be done at homeowners’ home

Per streamline refinance mortgage guidelines, there are two different loan programs that homeowners can refinance via streamline. They are FHA and VA Loans.

How Do FHA And VA Streamline Refinance Loans Work

Both FHA and VA do not require home appraisals on Streamline Refinances.

  • No income documents are required
  • The reason being is because these agencies already insure homeowners VA and/or FHA Loans
  • Borrowers have proven they have been making timely payments for at least the past six months
  • Loan amounts cannot surpass the original loan amount
  • So if they are insuring the mortgage, why would they not continue to insure the mortgage when borrowers are getting a lower payment
  • Both agencies are assuming borrowers already has been fully qualified and proven themselves

This is the reason why appraisals and income verification is not required per Streamline Refinance Mortgage Guidelines. Streamlines are quick, easy, and very fast to close. Most streamline refinances close in 2 weeks or less. There are no minimum credit score requirements. However, higher credit scores means lower rates. The only credit requirement on streamlines is that borrowers be timely on their current mortgage payments in past 12 months. One 30-day late payment in the past 30 days is allowed.

Net Tangible Benefit To Borrowers

What is the measurable net benefit for borrowers

In order for lenders to proceed with either VA and/or FHA Streamline Refinance is the refinance needs to offer a net tangible benefit to borrowers.

  • Need to lower current mortgage payment by at least 5% or more
  • Refund of the current escrow account to borrowers
  • Borrowers can skip up to two mortgage payments
  • No cash to close and/or out of pocket expenses
  • One of the current Streamline Refinance Requirements is that homeowners mortgage needs to be current

Borrowers can go over a net tangible benefit worksheet, which determines the benefits of doing a streamline refinance. 

Borrowers can benefit from streamlines by refinancing their adjustable-rate mortgages to a 15 and/or 30-year fixed-rate mortgage.  Need to have made at least six payments on a new home purchase to qualify. Gustan Cho Associates offers a no minimum credit score streamlines. Can use mortgage payment history with no credit scores for non-credit qualifying VA and/or FHA Streamline Refinance. The maximum amount of cash being refunded to borrowers cannot be greater than $500.

HUD And VA Streamline Refinance Mortgage Guidelines During And After Bankruptcy

There are specific FHA and VA Streamline Mortgage Guidelines During And After Bankruptcy:

  • Chapter 13 bankruptcy:
    • Borrowers can do streamline during Chapter 13 Bankruptcy if the following is met:
      • The borrower obtains Trustee Approval
      • Proof that the bankruptcy plan payment has been satisfactory during the term of repayment
    • No waiting period after Chapter 13 Bankruptcy discharged date
  • Chapter 7 Bankruptcy:
    • To qualify, the Chapter 7 Bankruptcy needs to be discharged
    • There is no waiting period after Chapter 7 Bankruptcy discharged date 

Borrowers who feel they may benefit from VA and/or FHA Streamline Refinancing, please contact us at Gustan Cho Associates Mortgage Group at 262-716-8151 or text us for faster response. Or email us at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.

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