FHA has permitted streamline refinances on FHA insured mortgages since the early 1980's. The term streamline refers only to the amount of paperwork and underwriting that needs to be performed and does not mean that there are no costs involved in the transaction.

Some of the basic requirements of a streamline refinance are:

1. The mortgage to be refinanced must already be FHA insured.

2. The mortgage to be refinanced should be current and not over 30 days delinquent more than once in the last year.

3. The benefit of the refinance is to result in lowering the borrower's monthly principal and interest payments.

4. No cash may be taken out on mortgages refinanced using the streamline process.

There are essentially two ways to streamline refinance your FHA loan:

1. Some companies offer "NO COST" refinances, which means no out-of-pocket expenses to the borrower. They can do this by charging a higher rate of interest on the new loan rather than having the borrower finance or pay the closing costs in cash. From this premium, the company pays any closing costs that are incurred on the transaction. The "NO COST" version of a refinance isn't always the least expensive way to refinance your loan.

2. Some companies 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 the original loan amount, for example: only some of the closing costs may be added to the new mortgage with other costs being paid in cash or through the premium rate as described above. Investment properties (properties in which the borrower does not live in as his or her principal residence) may only be refinanced without an appraisal. Therefore, some closing costs may not be included in the new mortgage amount.

Call us today and let us explain what we mean and educate you so YOU can decide what is best for your situation.