Mortgage

FHA Streamline Refinance: Costs and Necessities for 2020

The FHA Streamline refinancing

If you currently have an FHA
The FHA Streamline Refinance offers the mortgage
The easiest way to get a lower interest rate and monthly payment.

The FHA Streamline is a "Low-Doc"
Refinancing required with limited paperwork; The lender doesn't have to verify yours
Income or credit, and there is no home valuation.

That means optimized refinancing
closes faster than other loans and has slightly lower closing costs.

Thanks to the FHA Streamline,
those with existing FHA loans have easier access to them
todays low rates than most homeowners.

Check your FHA Streamline refinancing eligibility. (November 15, 2020)

In this article:

What is FHA Streamline Refinance?

The FHA Streamline is a special refinancing product reserved for homeowners with existing FHA mortgages. An FHA Streamline is the fastest, easiest way for FHA-insured homeowners to refinance their mortgages at today's low mortgage rates.

Some of the benefits of the FHA Streamline Program include:

Low refinancing rates – FHA lending rates currently average 2.25% (3.226% APR). This is an incredibly low rate compared to most mortgage lenders Lower MIP Prices – If you received an FHA loan between 2010 and 2015, you may be able to lower your annual mortgage insurance premium through an optimized FHA refinance MIP refund – Homeowners using the FHA Streamline Refinance can get up to 68 percent of their prepaid mortgage insurance reimbursed in the form of an MIP discount on the new loan No assessment – You can use the FHA Streamline Refinance even if your current mortgage is under water No verification of work or income – You may be eligible for FHA Streamline refinance even if you recently lost your job or had a pay cut No credit check – A low credit rating does not prevent you from using the FHA Streamline program. This can hardly be found with other refinancing loans

If you have an existing FHA loan and want to refinance at a lower interest rate, the FHA Streamline should be your first stop.

The advantages cannot be surpassed with any other refinancing option.

Check your FHA Streamline Refinance eligibility (November 15, 2020).

FHA Streamline refinancing rates

Today's 30-year average FHA rate is 2.25% (3.226% APR). Remember, however, that the FHA mortgage insurance fee increases the annual cost by 0.85%. This also applies to streamline refinancing.

If you are considering an FHA Streamline refinance, now is a good time to set a low base rate and see greater savings over the life of your loan.

Buy Low FHA Streamline Refinance Rates Here (November 15, 2020)

FHA MIP refund table

There is an added benefit for FHA-backed homeowners who refinance within the first three years of their existing lending.

The FHA offers a partial reimbursement of your previously paid Mortgage Insurance Premium (UFMIP).

The amount of the reimbursement decreases after the three-year window has expired.

For example, a homeowner who refinances an FHA mortgage after 11 months will receive a 60 percent refund on their original FHA UFMIP.

30 days later, the refund drops to 58 percent. After another 30 days, it drops to 56 percent and so on.

Months after closing
MIP refund
Months after closing
MIP refund
Months after closing
MIP refund

7th
68%
17th
48%
27
28%
8th
66%
18th
46%
28
26%
9
64%
19th
44%
29
24%
10
62%
20th
42%
30th
22%
11
60%
21st
40%
31
20%
12
58%
22nd
38%
32
18%
13
56%
23
36%
33
16%
14th
54%
24
34%
34
14%
15th
52%
25th
32%
35
12%
16
50%
26th
30%
36
10%

Note: FHA homeowners are only eligible for the Streamline refinancing program after six months. Entitlement to a MIP reimbursement therefore begins at seven months.

That's why it's rare
A good idea to wait for an FHA loan to be refinanced.

The sooner you refinance with the FHA Streamline Refinance Program, the higher your refund and the lower your total loan volume on your new mortgage.

This lowers the monthly payment
and preserve home equity – two big positives.

Check your eligibility for Streamline refinancing (November 15, 2020).

How the FHA streamline works

The FHA Streamline works much like any other refinancing program.

It is available as a fixed or variable rate mortgage. it comes with a term of 15 or 30 years; and there is no FHA prepayment penalty to worry about.

Note that the FHA Streamline cannot be used to refinance a 30 year mortgage into a 15 year mortgage.

However, it can be used to extend a 15 year loan
into a 30 year loan. This subsides
monthly payments even further for homeowners.

Another big plus is the prices for
The FHA Streamline Refinance is the equivalent of the mortgage rate on a homebuyer FHA loan. There is no
Penalty for being underwater or having very little equity.

No house rating

The biggest difference between that
FHA Streamline and most of the traditional mortgage refinancing options are the FHA
Streamline does not require a home valuation.

Instead, the FHA allows you to do so
Use your original purchase price as the current value of your home, regardless
What is your home worth today?

Because the FHA Streamline Refinance does not require a rating, you can refinance at a lower interest rate even if you owe more on your loan than the home is currently worth.

That way, with their FHA Streamline Refinance Program, the FHA doesn't care if you have your mortgage underwater.

Rather, the program promotes underwater refinancing.

Even if you owed twice what your home is now worth, FHA may still help you get refinance
Your home at no additional cost or penalty.

The Appraisal Waiver was a huge hit with US homeowners, enabling unlimited Loan-to-Value (LTV) loans through the FHA Streamline Refinance Program.

Check your eligibility for underwater refinancing (November 15, 2020)

Reduced documentation

Another big plus: this refinancing is pretty easy.

The FHA Streamline Refinance doesn't require most of the typical checks that you would need to get a new mortgage.

As written in the FHA's official mortgage guidelines:

No employment verification is required with an FHA Streamline Refinance. No income verification is required with an FHA Streamline Refinance. No credit score checks are required with an FHA Streamline Refinance (although most lenders do credit checks).

When you put it all together, you can (1) be unemployed, (2) have no income, (3) have a shaky credit report, and (4) have no home equity. However, you could still be eligible for an FHA Streamline refinance.

By the way, that's not as crazy as it sounds.

To understand why the FHA Streamline Refinance is a smart program for the FHA, we need to remember that the main job of the FHA is to insure – not "do" mortgages.

It is in the FHA's best interests to help as many people as possible qualify for today's low mortgage rates. Lower mortgage rates mean lower monthly payments, which in theory leads to fewer loan defaults.

This is good for homeowners who want lower mortgage rates and good for the FHA. With fewer loan defaults, the FHA will have to pay fewer insurance claims to lenders.

Check out today's FHA Streamline Refinance Rates today (November 15, 2020).

Are You Eligible for FHA Streamline Refinance?

Although the FHA Streamline Refinance bypasses "traditional" mortgage standards such as income verification and credit qualification, the program enforces minimum standards for applicants.

You need to show:

Three months on-time mortgage
Payments At least 210 days since or last time you bought your home
Refinancing A clear monetary advantage
to
Refinancing that can lower your interest rate
in most cases by at least 0.50%

The official FHA Streamline Refinance Guidelines can be found below. Note that not all mortgage lenders adhere to official federal housing management guidelines.

Some lenders may enforce minimum creditworthiness or other underwriting standards for FHA Streamline mortgages.

If your current lender needs a home appraisal or
For the income review, you can look for a milder lender
adheres to FHA minimum guidelines for streamline refinancing.

Check Your FHA Streamline Eligibility (November 15, 2020)

A perfect 3 month payment history is required

The main goal of the FHA is reduction
the total credit pool risk. Hence, it is the number one qualification standard
is that homeowners who use the Streamline Refinance program must have a perfect one
Payment history going back at least three months.

Homeowners are 30-day, 60-day and 90-day late payments
This refinancing option may not be used.

A late mortgage payment is allowed in the past 12 months. The loans must be current at the time of completion.

210 days waiting time after purchase or refinancing

The FHA requires borrowers to make six mortgage payments on their current FHA-insured loan and that 210 days pass from the last deadline to be eligible for a streamline refinance.

The refinancing must have a "purpose"

Streamline refinance applicants
must have a "material net benefit" from the
Refinancing – that is, there will be a clear amount of money
Take advantage of the new loan.

The material net benefit is loose
defined as reducing the “combined rate” by at least half a percent.

For example, say a
Homeowner has opened an FHA loan in
May 2013 with a rate of 5.00% and an annual mortgage insurance premium equal
to 1.35 percent of the mortgage amount.

The combined rate is 6.35 percent.

The homeowner is looking into a streamline
Refinancing and receives a course offer of 4.75% with
MIP of 0.85 percent. They save on their rate and
Mortgage insurance as FHA MIP was reduced in January 2015.

The new combined rate would be
5.60 percent or
three quarters of one percent lower than the existing combined rate. This FHA
Refinancing would be eligible.

Another allowable net material benefit is refinancing from a variable rate mortgage to a fixed rate mortgage.

This is seen as a benefit because fixed rate mortgages have predictable interest rates and payments that have a lower risk of default.

Take "Cash Out" to Pay Bills
no allowable material net benefit.

Check Your FHA Streamline Refinance Eligibility (November 15, 2020)

Employment and income are not checked

The FHA does not require a borrower's employment or annual income verification under the FHA Streamline process.

There is no employment review, nor pay slips, W-2, or tax returns required for approval.

You can be unemployed and get an FHA Streamline refinance approval as long as you meet the other program requirements.

Credit scores are not checked

The FHA does not review credit scores under the FHA Streamline Refinance program. Instead, the payment history is used as a measure of future credit performance.

This means FICO scores below
640, under 620, under 580, and even under 500 could be
eligible for Streamline Refis.

However, some lenders create it
their own minimum requirements. Check your lender's credit qualification guidelines
before applying.

Click Here To Check Out Your FHA Rate Reduction (November 15, 2020).

The loan balances may not be increased to cover the borrowing costs

The FHA prohibits the increase of a
Optimize Refinance loan balance to help cover related loan fees like closing costs.

The mortgage amount is limited by
the mathematical formula of (Current Principal Balance + Upfront Mortgage Insurance)
Bonus).

All other costs – including incurrence
Fees, title fees, and prepaid taxes and insurance – must
either (1) paid for as cash by the borrower on completion, or (2) credited by the borrower
Loan officer in full.

The latter is known as the "free FHA"
Streamline."

No payment

You cannot withdraw extra money, though
Refinance with an FHA Streamline Loan. This refinancing is mainly designed
to lower
the homeowner's interest rate
and payment.

The FHA payout refinancing is however
another refinancing option offered by the FHA.

You can use it to take out a loan of up to 80 percent of your home
Value. If this amount is greater than yours
current credit balance take the difference in cash.

Homeowners can use these funds for any purpose: to pay
Reduce debt, upgrade your home, or set up an emergency fund.

Assessments not required

The FHA doesn't care about the home value – they insure your loan regardless.

Hence, the FHA does not require reviews for its Streamline refinancing program. Instead, the original purchase price of your home or the last estimated value is used as the rating point.

Underwater houses are still FHA Streamline-enabled.

Should You Use the FHA Streamline?

Is an FHA Streamline Refinance Right For You - Infographic | The mortgage reports

What Happens To FHA Mortgage Insurance When You Optimize Refinance?

As with other FHA loans, borrowers must purchase mortgage insurance with FHA Streamline Refinance.

Even if you have built up equity in your home since purchasing it, the FHA Streamline Refinance cannot be used to eliminate Mortgage Insurance Premium (MIP).

FHA borrowers are required to make two types of mortgage insurance payments: a prepayment for mortgage insurance, which is paid upon conclusion, and an annual payment, which is split into 12 installments and is paid monthly with your mortgage.

Upfront Mortgage Insurance Premium (UFMIP) = 1.75% the loan amount for recent FHA loans and refinancesAnnual mortgage insurance Premium (MIP) = 0.85% the loan amount last FHA loan and refinancing

In terms of mortgage insurance premiums, homeowners using the FHA Streamline Refinance program are divided into two classes:

Homeowners whose new loan replaces an FHA mortgage approved prior to June 1, 2009. Homeowners whose new loan replaces an FHA mortgage approved on / after June 1, 2009.

First class homeowners – those with "old" FHA mortgages – get different mortgage coverage than newer FHA homeowners.

In particular these older FHA
Mortgages qualify for a reduced upfront premium of
only 0.01%
of the loan amount or $ 10 for
all borrowed $ 100,000.

In addition, monthly mortgage
Insurance is only 0.55 percent of the loan amount per year,
compared to a “regular” MEP of 0.85 percent per year.

FHA Streamline MIP for loans approved on / after June 1, 2009

If you are refinancing an FHA mortgage through the FHA Streamline Refinance Program and your existing FHA mortgage was approved on or after June 1, 2009, your mortgage insurance plan for your new FHA loan will be as follows.

Upfront Mortgage Insurance Premiums (UFMIP)

For an FHA Streamline Refinance that replaces a loan approved on or after June 1, 2009, the upfront FHA mortgage insurance premium is 1.75 percent of your loan size, or 175 basis points.

That's $ 1,750 for every $ 100,000 borrowed. The FHA automatically adds the $ 1,750 premium to your loan balance – it is not paid out in cash.

However, not all refinancing households pay the full amount.

As shown in the table above, those who use an FHA Streamline within three years of their original loan will receive an upfront MIP refund.

This can significantly lower the amount of UFMIP that is added to your new loan, thus reducing the total amount you have to pay.

Annual Mortgage Insurance Premiums (MIP)

The annual MIP schedule for an FHA Streamline refinance replacing a loan starting June 1, 2009 is as follows:

15 & 30 year loan terms with
an LTV over 90 percent: 0.85% annual MEP, payable for life
of the loan15-
& 30-year loan terms with an LTV below 90 percent: 0.85% annually
MIP, payable for 11 years

Note that these MIP charges may apply
lower than what you pay for your existing FHA home loan.

In January 2015, the FHA lowered its mortgage insurance premiums on 30-year loans, which made it cheaper to transport an FHA home.

If your current FHA MIP is higher than stated above, you should start a refinance immediately to benefit from a new, lower FHA MIP.

FHA Streamline Refinance MIP (for loans approved prior to June 1, 2009)

If your existing FHA home loan was
Before June 1, 2009, your mortgage insurance premiums were approved
"Grandfather."

You can refinance through the FHA
Optimize the refinancing program and pay reduced interest rates on your advance and annual mortgage
Insurance premium.

Upfront Mortgage Insurance Premiums (UFMIP)

For an FHA Streamline Refinance that replaces a loan approved prior to June 1, 2009, the new FHA mortgage pre-mortgage insurance is 0.01 percent of the loan size, or 1 basis point.

For example, if your new FHA Streamline refinance is $ 100,000, the FHA will charge an upfront mortgage insurance premium (MIP) of $ 10 to be paid upon completion.

The FHA will automatically add the payment of $ 10 to your new loan balance.

Annual Mortgage Insurance Premiums (MIP)

Annual MEP is similarly affordable for older FHA loans. For an FHA Streamline Refinance that replaces an FHA loan approved before June 1, 2009, the annual MEP is 0.55 percent per year or 55 basis points.

The full annual MIP schedule is as follows:

15 & 30 year loan terms with
an LTV over 90 percent: 0.55% annually
MEP, payable for the term of the loan15-
& 30-year loan terms with an LTV below 90 percent: 0.55% annually
MIP, payable for 11 years

FHA MIP cancellation policy

The FHA requires some homeowners to purchase mortgage insurance for as long as their loan is valid.

If your FHA Streamline Refinance is replacing a loan on June 1, 2009, the following rules apply to your FHA MIP cancellation:

LTV of 90 percent or less at the time of purchase: MIP is required for 11 years LTV greater than 90 percent at the time of purchase: MIP is required for the life of the loan

The FHA MIP termination policy applies equally to 15 year loan terms and 30 year loan terms.

Note that homeowners refinance may happily close cash to reduce their loan balance and change their MIP disposition. However, not everyone will have the money to take such a step.

This is why when exploring an FHA
If you want to optimize your refinancing, you should also look at other mortgages
Refinancing options including the conventional
Mortgage loan through Fannie Mae or Freddie Mac, which is almost available with
every mortgage lender.

The FHA enables their homeowners to refinance a conventional loan
Cancel FHA MIP.

FHA Streamline Refinance FAQ

What is the FHA Streamline Program?

FHA Streamline is a refinancing program that only current FHA homeowners can take advantage of. It's faster and easier than most refinance programs, with no income, credit, or home valuation documentation required.

An FHA Streamline Refinance can help homeowners lower their annual mortgage insurance premium (MIP) or even get a partial refund on their MIP upfront payment.

How does the FHA Streamline Refinance work?

The FHA Streamline Refinance resets your mortgage with a lower interest rate and a lower monthly payment. If you have a 30 year FHA mortgage, you can use the FHA Streamline to refinance into a cheaper 30 year loan. 15 year old FHA borrowers can refinance into a 15 or 30 year loan.

The FHA Streamline does not cancel Mortgage Insurance Premium (MIP) for those who pay it. However, the annual MIP rates may decrease depending on when the loan was taken out.

Do I have to pay closing costs for an FHA Streamline refinancing?

The borrower has to pay the closing costs for an FHA Streamline refinance. Unlike other types of refinancing, you cannot include these costs in your loan amount.

FHA Streamline closing costs are typically the same as other mortgages: 2 to 5 percent of the mortgage amount, which is $ 3,000 to $ 7,500 for a $ 150,000 loan. The difference is that you don't have to pay for an FHA streamline appraisal, which could save $ 500 to $ 1,000 in closing costs.

Will an FHA Streamline Refinance PMI go off?

No, the FHA Streamline Refinance does not remove mortgage insurance. Refinanced FHA loans continue to have annual mortgage insurance plus a new upfront mortgage insurance fee of 1.75 percent of the loan amount. The upfront fee will be added to your loan amount.

However, if you use the FHA Streamline Refinance within three years of opening your loan, you will be reimbursed part of your original UFMIP fee, reducing the total amount of the mortgage.

Do I Qualify for an FHA Streamline Refinance?

To qualify for an FHA Streamline refinance, your current home loan must be insured with the FHA. If you are not sure if this is the case, ask your lender.

FHA also requires three months of on-time payments and a waiting time of 210 days since your home was last closed (either purchase or refinancing). After all, the FHA Streamline Refinance must have a “purpose”. That usually means the refinance needs to lower your combined interest and insurance rate by at least 0.50%.

Does FHA Streamline need a credit check?

Technically, the FHA Streamline does not require a credit check. This means that homeowners may still be able to take advantage of Streamline Refinance even if their creditworthiness has fallen below the 580 threshold for FHA loans. However, some lenders can still check your credit report. So if your bankroll is on the low end then you should look around.

Can you cash out an FHA Streamline?

No, you cannot cash out an FHA Streamline Refinance.

What documents do I need for an FHA Streamline refinancing?

The FHA Streamline Refinance is a "low-doc" refinancing loan. It requires less paperwork than most other mortgages. However, some documents are still required. For an FHA Streamline refinancing you also need:

– A loan application
– A recent mortgage statement with a six month payment history
– Contact information for your employer (the lender can verify employment but not income)
– Two months' worth of bank statements showing that you can cover the closing costs out of pocket
– Electricity bills showing that you use the house as your primary residence

When can I do an FHA Streamline refinancing?

FHA homeowners are eligible for a Streamline Refinance 210 days after their last close. This means that you must have made six consecutive mortgage payments since you bought the home or last refinanced it.

Can you do the FHA Streamline Refinance twice?

Yes, you can use the FHA Streamline Refinance multiple times. All you have to do is meet the FHA guidelines. This means that it has been at least 210 days since your last refinancing. You made your last three payments on time and you can cut your interest rate by 0.50%.

What are the benefits of an FHA Streamline?

The great benefit of an FHA Streamline refinance is that you can switch your FHA loan to a lower interest rate and lower monthly payment. You can save money by getting rid of your existing higher interest rate without as much hassle as traditional refinancing options.

Another advantage of the FHA Streamline is that there is no house valuation. So you can refinance into a lower FHA mortgage rate even if you have very little equity or your loan is under water.

Is the FHA Streamline Refinance worth it?

The FHA Streamline Refinance is likely worth it if you can cut your mortgage rate and monthly payment significantly. This is especially good deal for homeowners who bought or refinanced from 2010 to 2015, as the FHA has since cut their annual mortgage insurance rates.

Refinancing a mortgage before 2015 with the FHA rationalization could potentially cut your annual mortgage insurance rate from over 1 percent to just 0.85 percent.

How Do I Get Rid of PMI for an FHA Loan?

The FHA Mortgage Insurance Premium (MIP) is 11 years if you paid a down payment of 10 percent or more, or the entire life of the loan if your down payment was less than 10 percent.

The only way to get rid of FHA mortgage insurance is to refinance your current FHA loan into a conventional no PMI loan.

To do this, you need at least 20 percent equity in your home and a credit score of at least 620 or higher. You will also need to pay the closing costs and complete the new loan subscription process.

What Are Today's FHA Streamline Prices?

FHA mortgage rates are low and homeowners typically close in less than 30 days. Remember, the faster you close, the higher your FHA MIP refund.

First, check out today's FHA refinance rates to see what you are doing
could save.

Check your new plan (November 15, 2020)

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