FHA Streamline – An Alternative to FHA Short Refinance Program

We can help homeowners in many different situations. We counsel homeowners in a wide range of situations. Not all are behind on their mortgage payments. However, they might have another issue that is causing concern.

There was one program for people with mortgages that owed more than 15% of the property’s actual value: The Federal Housing Administration’s Short Refinance Program. This program allowed homeowners to refinance their mortgage loans into new mortgages that were more affordable and comparable in value to their homes. FHA insured the new mortgage, and the amount owed was limited to 97/3 % of the property’s actual value.

Although the program ended in 2016, HUD-approved housing counsellors remained current with all available options for borrowers. They also continue to understand mortgage solutions that can help homeowners avoid foreclosure.

Current Housing Assistance Programs

Anybody thinking of refining an FHA Streamline loan could benefit from HUD-approved housing counselling.

Counsellors can help you review the options available and advise you on what to do to be eligible for the best programs.

Keep in mind, however, that both the FHA Short Refinance Program (now defunct) and FHA Streamline Refinance (currently active) are Federal programs. Depending on the location of your property, there may be additional options available at both the local and state levels.

A certified HUD housing counsellor can help you get up-to-speed on local programs that could assist you in preserving your homeownership or helping you transition to a mortgage loan.

FHA now offers FHA Streamline refinance, a new option for refinancing. This option allows you to refinance an FHA loan into another loan with lower payments, fixed rates, or lower interest rates.

FHA Streamline Requirements

Borrowers must fulfil basic requirements under the FHA Streamline Refinance Program.

• FHA insurance must be obtained for mortgages
• You cannot default on your mortgage.
• Refinance must provide a benefit to the borrower through a lower interest rate, a new loan term, lower monthly payments, or some other tangible benefit.
• The borrower cannot take out more than $500 via financing.
• Only HUD-approved nonprofit borrowers can refinance investment properties.

HUD provides detailed guidelines to lenders who offer a Streamline Refinance. The Lender might sometimes cover closing costs by increasing the interest rate. The borrower will pay more interest, but there are no extra costs. This is one way that the current program might streamline the refinance process.

FHA Streamline Refinance

The FHA Streamline Refinance is available for borrowers with an FHA loan who want lower monthly payments or interest rates.

To streamline the process, it is intended to be fast and easy with minimal documentation and credit checks. Sometimes income verification is not required, and home appraisals are not necessary. This allows for faster approvals.

The biggest difference is that the FHA Streamline is for FHA loans, while the Short Refinance Program was for non-government-backed loans.

FHA Streamline requires that you pay closing costs and mortgage insurance premiums. A HUD-certified housing counsel will review all requirements to help you decide if this type of refinancing is right for you.

FHA Loan after Short Sale

Current borrowers can apply for an FHA loan following a short sale. Guidelines are provided in HUD 4000.1, The FHA Single Family Loan Program Handbook.

These guidelines define a “short sale” as any real estate sale that does not generate enough proceeds to pay the full amount owed. The Lender agrees, however, to forgive any owing balance.

The current rules require that a borrower wait three years before applying for an FHA loan. However, exceptions can apply. If you have had a short sale in the past and you are now ready to re-enter homeownership, an FHA loan may be an option.