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.
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As losses continue to mount for lenders and GSEs, several lenders have increased the minimum credit score required on FHA and VA loans from a 620 mid score to 640. We do still have lenders that will go as low as a 580 mid score.
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.
