What is FHA streamline refinance loan?
Streamline refinance is in reference to having a current mortgage that is FHA insured. This kind of mortgage requires the borrower to have limited documentation to show credit history and limited underwriting is needed. These refinance loans are available to borrowers who qualify or not qualify with their credit rating. When such a loan is streamlined, there is not much documentation required, but there are still costs involved.
Some of the fundamental requirements for a streamline refinance loan are:
- The existing mortgage must already be insured as a FHA loan
- The mortgage must not be delinquent and must be current
- The results of the refinance must be tangibly beneficial to the borrower. This means that the new terms and interest rate must make sense and must be better than the first
- The borrower cannot not take out cash of more than $500 on a refinanced mortgage with use of the streamline refinancing process
Different lenders offer the streamline refinancing process in different ways.