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What is an FHA Mortgage Loan?

FHA Mortgage Loans are quickly becoming one of the most popular loan programs nationwide.  FHA mortgages are often called government home loans because they are insured by HUD against default so they are a stable option with low rates and typically a fixed interest rate that includes principal reduction as part of the payment each month.

FHA has been around for decades, and there are many innovative programs to help different segments of the population to realize the dream of home ownership.  For example, the teacher-next-door program allows teachers to buy a home in particular neighborhoods at 50% of the sales price with an FHA mortgage loan, and FHA will pay the other 50%.  The FHA Kiddie Condo program allows a parent or other blood-relative to co-sign for their child on the purchase of a home or condo. We also offer the FHA rehab loan. Contact us for more information on this great FHA mortgage loan. These are just a few examples of the many programs that FHA offers.

If you currently have an FHA loan, the FHA Streamline Refinance program is a fast and easy way to lower your payment or refinance out of your adjustable FHA mortgage loan.  No appraisal, no credit check, and no income or asset documentation make this program hassle-free.

If you would like to buy a home, an essential step before you start looking is to get pre-qualified.  This means applying with a lender and going through a credit check as well as some documentation to verify income and down payment source.

Once this has been done, we will issue you a pre-approval letter which you will submit with your offers on a home to let the seller know you have the financing lined up.  Our FHA mortgage loan experts are standing by to help you get pre-approved or to answer your questions now!

Watch the video for some of the changes coming to FHA streamline refinances and why FHA is tightening up on their requirements.

Summary of FHA  Streamline Refinance changes

Effective date is for case numbers issued on or after 11/18/2009

Old: Could do an FHA Streamline Refinance loan with no waiting period from current loan

New: Borrower must have made 6 full payments on loan before being allowed to streamline.

Old: FHA Mortgage Loan being refinanced must be current.  No other requirement

New: No more than one 30 day late in previous twelve months.  Previous three months must have no lates.  If mortgage is less than twelve months old, all payments must have been made in month due.

Old: No real determination as to tangible benefit to borrower.

New: must have reduction of total payment (PITI) of a minimum of 5% or

Must be refinancing from ARM to fixed rate or

Must be reducing the term of the mortgage

Old: No income or asset requirement regardless of funds to close

New: Underwriter must certify that borrower is employed and has income

All assets needed to close must be verified

Old: No CLTV

New: Maximum CLTV is 125% based on original appraised value unless new appraisal is used then based on new appraisal

*Old: Could run FHA Streamline Refinance through AU (FHA Total Scorecard)*

*New: If run through AU regardless if mistake, streamline is not available.  Rate and term full doc is only option available*

Old: Abbreviated application was allowed without all information completed

New: Full application must be completed with all income, assets, and liabilities

FHA Streamline Refinance  without appraisal:

Old: New base mortgage amount could include old principal balance plus closing costs, prepaids, and discount points less UFMIP refund not to exceed old total mortgage amount

New: New base mortgage amount cannot exceed old principal balance minus UFMIP refund

FHA Streamline Refinance  with appraisal:

Old: New base mortgage amount could include old principal balance plus closing costs, prepaids, and discount points less UFMIP refund not to exceed statutory LTV limits

New: New base mortgage amount is lower of old principal balance minus UFMIP refund, plus closing costs, prepaids to establish escrow account or

97.75% of appraised value of property.  No discount points may be included

* This is very important for you the consumer. If your mortgage professional is not on top of these new FHA Streamline Refinance guidelines, it could very well cost you your chance to refinance.

Summary of FHA  Streamline Refinance changes

Effective date is for case numbers issued on or after 11/18/2009

Old: Could do an FHA Streamline Refinance loan with no waiting period from current loan

New: Borrower must have made 6 full payments on loan before being allowed to streamline.

Old: FHA Mortgage Loan being refinanced must be current.  No other requirement

New: No more than one 30 day late in previous twelve months.  Previous three months must have no lates.  If mortgage is less than twelve months old, all payments must have been made in month due.

Old: No real determination as to tangible benefit to borrower.

New: must have reduction of total payment (PITI) of a minimum of 5% or

Must be refinancing from ARM to fixed rate or

Must be reducing the term of the mortgage

Old: No income or asset requirement regardless of funds to close

New: Underwriter must certify that borrower is employed and has income

All assets needed to close must be verified

Old: No CLTV

New: Maximum CLTV is 125% based on original appraised value unless new appraisal is used then based on new appraisal

*Old: Could run FHA Streamline Refinance through AU (FHA Total Scorecard)*

*New: If run through AU regardless if mistake, streamline is not available.  Rate and term full doc is only option available*

Old: Abbreviated application was allowed without all information completed

New: Full application must be completed with all income, assets, and liabilities

FHA Streamline Refinance  without appraisal:

Old: New base mortgage amount could include old principal balance plus closing costs, prepaids, and discount points less UFMIP refund not to exceed old total mortgage amount

New: New base mortgage amount cannot exceed old principal balance minus UFMIP refund

FHA Streamline Refinance  with appraisal:

Old: New base mortgage amount could include old principal balance plus closing costs, prepaids, and discount points less UFMIP refund not to exceed statutory LTV limits

New: New base mortgage amount is lower of old principal balance minus UFMIP refund, plus closing costs, prepaids to establish escrow account or

97.75% of appraised value of property.  No discount points may be included

* This is very important for you the consumer. If your mortgage professional is not on top of these new FHA Streamline Refinance guidelines, it could very well cost you your chance to refinance.