FHA streamline refinances are great ways for those with current FHA mortgages to refinance. There are a couple different ways to use streamline refinances. You can refinance a current FHA mortgage without an appraisal. If your home value has not increased, this is a great way to lower your interest rate and not have to worry about a new appraisal value.
Technically, FHA streamline refinances do not require income verifications, credit and appraisals. Most lenders will require a credit report and want to see a score of 620-640. There can't be any mortgage lates in the last 12 months. If you have a new loan, you must have 6 months of payments on it and it has to be 210 days since you closed on that loan. We need to show a benefit for the refinance, so you need to lower your payment, the term of your loan or go from an adjustable rate to a fixed rate loan.
FHA streamline refi's allow for no appraisal -but that also means you can't roll any of the closing costs into the loan amount. Many people will use the interest rate to pay the closing costs. It's the same as a no cost refi – you select a slightly higher interest rate and that pays most of the closing costs.
If you choose to have an appraisal done, you can roll the costs into the loan if the apprasial is high enough.
With the mortgage insurance reduced to .85% as of January 26, 2015, FHA refi's may be a great way to lower your monthly payment. If your loan was endorsed before June 1, 2009, you can refinance with the "old" numbers. Your monthly MIP would be equal to .55% and the upfront MIP would be .01%! For those that have FHA loans endorsed after June 1, 2009, the upfront MIP is 1.75%, the new monthly is .85%.
Just the reduction in MIP could lower your payment substantially. If you are in an area where property values have not increased much, you may want to look at a FHA refi without an appraisal. Talk to your loan officer and see what your options are. Interest rates are low and it is a great time to look at a refinance.
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants, NMLS#150953 – Email – Website