The FHA has been insuring loans since the 1930's with their refinancing department being around since the early 1980's. The FHA offers the option of FHA Streamline Refinancing. The "streamline" refers to the amount of paperwork and underwriting that is undertaken and not due to a monetary factor such as being cheaper or having no cost at all.
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There are some requirements when trying to streamline your current loan.
- The mortgage that is to be refinanced must be insured through the FHA.
- The current mortgage must be current and not be delinquent. Get your payments in and on time.
- The results of the refinance must lower the monthly principle and interest payments for the borrower.
- No cash may be taken out on mortgages refinanced using the streamline refinance process.
There are a few ways in which you can streamline refinance as well. After meeting the requirements you can check out these options for your refinance option.
There is the "no cost" refinance which refers to no out of pockets costs for the refinancing. What generally happens on a "no cost" refinance is the lender will charge a higher interest rate and if there were any closing costs paid for or refinanced by the borrower the lender will then pay any closing costs or other costs incurred during the transaction.
Another streamline refinancing option you have includes the closing costs into the new mortgage amount. This of course is only available if enough equity is in the home after it is appraised. The streamline refinance can occur without an appraisal but the new loan will not be able to exceed the original loan amount. If you are not living in the property but rather it is an investment property, the refinance can only occur without an appraisal.