Rates are great use an FHA Streamline Refinance today….. or should you?

(Last Updated On: February 24, 2016)

You may have noticed lately numerous advertisements of “refinance now the lowest rates ever” here in the Woodlands, TX.  Many people are taking the advice of these advertisements and refinancing their FHA home loan only to find they are not saving as much as they were lead to believe by the “order taker” at the end of the phone.

This is a detailed topic so I’ve divided it into two parts.  Part 1 covers what is an FHA Streamline Refinance and part 2 covers the details of an FHA Streamline Refinance.

There are many reasons that when you use an FHA streamline refi here in Texas you Refinancing with an FHA streamline in the Woodlands Tx
may not get the savings you were promised.  The biggest one is in the past couple of years things have changed with FHA especially with MIP (FHA Mortgage insurance Premium).  If you have an FHA mortgage then to do a refinance the best option may be a FHA streamline refinance.  I will cover both sides of the situation.

This FHA streamline refinance information is correct and accurate as of today, Sunday September 24th 2017.  Mortgage requirements and guidelines change constantly.  If you get your information elsewhere, double-check this blog’s information first.  Remember to do an FHA Streamline refinance you MUST currently have an FHA Mortgage.

FHA Streamline Refinance gets back to basics

The market share for FHA mortgages has jumped 10-times over what is was in 2006 creating a huge number of first time FHA borrowers throughout the US.

Conventional mortgages and FHA mortgages are identical in most ways today.  They are both offered as fixed or adjustable rate, they are available with 15-year or 30-year terms and they do not come with a prepayment penalties.  However, FHA borrowers have access to a special program called the FHA Streamline Refinance.  To apply for for an FHA Streamline refinance and see if it is in your best interest just go to our online application here and we will be happy to assist you.

The FHA Streamline refi program underwent numerous changes in the past three-FHA Streamline Refis underwent some changes in 2011years.   However, in a Announcement made in February, 2011 HUD stated that the FHA streamline is going back to basics.  So according to the announcement the FHA Streamline is once again a No Income verification, No job verification and No credit check program or is it?

The Reality of an FHA Streamline refinance

While the above is ok with FHA is is not ok for nearly every lender in Texas or the country.  FHA Mortgage lenders impose further restrictions on an FHA Streamline refinances known as “Lender or investor overlays”.  To be able to sell your mortgage to other banks as an investment there are a set of standards that are applied.  Here is a summary of the FHA Streamline Refinance Changes compared to Lender overlays:

Table 1: FHA Streamline Guidelines vs Bank Overlays

FHA SaysBanks Say
Perfect 1-year Payment History requiredPerfect 1-year Payment History required
210-day waiting period between RefinancesPrefer 365-day waiting period
employment and income Not VerifiedPrefer 365-day waiting period
Employment and income Not VerifiedEmployment Verified Income Not Verified
Credit Scores Not VerifiedCredit Scores need to be above 620 for most banks. Preferrably 640
Refinance must have PurposeRefinance must have Purpose
Appraisal not requiredAppraisal IS required

If you think an FHA Streamline may be in your best interest read on to part two of this blog I will cover the definitions and how it is determined if a FHA Streamline refinance has  “Net Tangible benefit” to you.  As always consult a Certified Mortgage Professional when considering any purchase or refinance.  They can alert you to both the benefits and pitfalls of refinancing in your particular situation.

This FHA streamline refinance information is correct and accurate as of today, Sunday September 24th 2017.  Mortgage requirements and guidelines change constantly not only here in the Woodlands Texas but nationwide and are slightly different from state to state.  If you get your information elsewhere, double-check this blog’s information first if you are in the state of Texas.  To do an FHA Streamline refinance in the Woodlands or anywhere else in Texas you MUST currently have an FHA Mortgage.

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