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3 Secrets of FHA Streamlines Revelead

December 21st, 2010

The FHA streamline loan has become one of the most sought after mortgage refinancing options in the country in 2010.  We outlined the most important factors that you need to know about FHA streamlines.

1. What does a borrower need to qualify for a FHA streamline refinance?

The first key component is that borrowers must presently have a FHA loan.

• Borrowers must have made at least 6 months’ worth of FHA mortgage payments.

• No mortgage payments can have been reported as “late” or delinquent” on the loan over the last year.

2.  Is there a home appraisal needed for qualification purposes?

In most cases, there is no formal appraisal required for FHA streamlines. This helps many underwater borrowers refinance in a pinch. Some borrowers who have no equity issues may want to do an appraisal because it enables them to finance their closing costs.  Last year, HUD changed the FHA guidelines to no longer allow borrowers to finance lender closing costs on the standard FHA streamlines.  No cost FHA loans are available to qualified borrowers, so discuss your eligibility for no cost refinancing.  This means that if your lender charges for processing, underwriting, title, escrow and loan origination that you will have to pay for these streamline refinance closing costs unless you qualify for a no cost FHA streamline.

3. Does a FHA streamline require income documentation?

In most cases with a FHA streamline refinance if the borrower is a salaried employee, the underwriter will not ask for income documentation like paystubs or W2’s.  However they will verify with your employer that you are still currently working with the company in the position that you stated on your residential loan application.

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