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POPULAR PURCHASE PROGRAMS
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FHA STREAMLINE REFINANCE
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 Description
The Federal Housing Authority (FHA) has permitted streamline refinances on insured mortgages since the early 1980's.
The streamline refers only to the amount of documentation and underwriting that needs to be performed by the lender,
and does not mean that there are no costs involved in the transaction. The basic requirements of a streamline
refinance are:
- The mortgage to be refinanced must already be FHA insured
- The mortgage to be refinanced should be current (not delinquent).
- The refinance is to result in a lowering of the borrower's monthly principal and interest payments.
- No cash may be taken out on mortgages refinanced using the streamline refinance process.
Lenders may offer streamline refinances in several ways. Some lenders offer "no cost" refinances
(actually, no out-of-pocket expenses to the borrower) by charging a higher rate of interest on the
new loan than if the borrower financed or paid the closing costs in cash. From this premium, the lender
pays any closing costs that are incurred on the transaction.
Lenders may offer streamline refinances and include the closing costs into the new mortgage amount.
This can only be done if there is sufficient equity in the property, as determined by an appraisal.
Streamline refinances can also be done without appraisals, but the new loan amount cannot exceed what
is currently owed, i.e., closing costs may not be added to the new mortgage. Those costs either must
be paid in cash or through the premium rate as described above. Investment properties (properties in
which the borrower does not reside in as his or her principal residence) may only be refinanced without
an appraisal and, thus, closing costs may not be included in the new mortgage amount.
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Advocate Mortgage Group, Inc
16 South Calvert Street, Suite 203
Baltimore, MD 21202
Phone: 410.625.5420
Fax: 410.625.5424
E-Mail:
Copyright © 1997, 1998, 1999, 2000 by Advocate Mortgage Group.
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