FHA streamline loans are mortgage refinance loans Guaranteed by the U.S. government; the Federal Housing Administration of the U.S. Department of Housing and Urban Development, or HUD, administers the FHA streamline program. Not all creditors have HUD ability to problem FHA-insured mortgage loans, and only approved lenders can assist you get through the FHA streamline refinance process.
Significance
FHA streamline is the procedure for refinancing a current FHA mortgage with a FHA mortgage that is new. FHA mortgage loans give significant advantages for borrowers, such as relaxed credit eligibility requirements, small down-payment requirements, and favorable interest rates. An FHA streamline enables a borrower to refinance a current FHA loan at a lower rate of interest.
Characteristics
An FHA streamline refinance is a relatively simple mortgage refinance procedure, because the creditor relies almost entirely on the application that you submitted when you got your existing FHA loan. The lender does not pull new credit reports, does not need a new appraisal or inspection and does not need that you prove that you meet the debt-to-income ratios required by HUD. Your creditor may verify that you have an income source, but past this, the lender will require hardly any new paperwork.
Identification
Only certain lenders have HUD authority to procedure FHA streamline loans. HUD maintains a current list of all brokers and lenders . You may search this list by creditor name, geography or loan type. You must use a creditor which appears on the HUD list.
Types
Even brokers and lenders come in two forms. Some lenders, called Direct Endorsement or DE creditors, have authority to issue final approval on FHA streamline loans, while other creditors only have authority to process applications but must submit the applications to HUD for final approval. Many borrowers prefer DE creditors since there’s no delay waiting for HUD closing approval.
Expert Insight
Your mortgage lender may process an FHA streamline application for you. Some lenders are prepared to try it, while some are not. The lender who processes an FHA streamline on a current FHA loan is, in effect, only agreeing to a reduced mortgage payment every month. Some lenders are prepared to accept the low payment instead of losing your mortgage completely.