FHA Streamline Refinance Worksheet – Explained

FHA stands for Federal Housing Administration. If you are looking for refinancing against your mortgage, you will obviously come across many options and choices. This form of refinance has got its name because it is controlled by the FHA.

WHAT IS THE MAIN OBJECTIVE OF FHA REFINANCE?

The main objective of this form of refinance is to ensure that the customers have an easier and simpler way for getting refinance from FIs who are already participating in such a lending arrangement. The basic rules for availing FHA streamline refinance is not too difficult to understand. There are basically two main criteria that must be met. To begin with the homeowner must have an existing mortgage loan that is insured by FHA. Secondly, there should not be any delinquencies on the repayment against such mortgage loans. Once these two main criteria are met, it should not be too much of a problem to get refinancing loans against existing FHA mortgage loans.

WHY IS THIS REFINANCE SO POPULAR?

There are some interesting and key takeaways as far as this refinance option is concerned. As mentioned above, those who already are running a FHA insured mortgage can easily avail this additional refinance. However, as mentioned earlier, they should make sure that there are no delinquencies against the existing mortgage that is already running. Hence, it may not be wrong to mention here that this is a way of incentivizing good borrowers.

Further, the borrowers must also know how to present the FHA STREAMLINE REFINANCE WORKSHEET in the right manner. In other words, the borrowers must be able to present their case properly. They must be able to make out a case that going in for this FHA streamline finance, he or she will be able to see a net visible advantage or benefit. There are many professionals who can help in presenting the case properly and make an honest case for availing this form or refinancing against mortgage.

Another important point is to make sure that the borrower has maintained a clean slate as far as the existing mortgage loan is concerned. There should not be any delinquency on the current mortgage. Further, not more than $500 is allowed to be withdrawn for the purpose of meeting delinquencies.

To understand this form of refinance better, it is important for you to know how exactly it works. Understanding it better will help in many ways. You will, as a benefactor of this refinance will be able to see the reasons as to why it is so popular. Secondly, you also will be able to present your case properly, adequately and professionally to the lenders so that you are able to show some tangible net benefit by going in for such refinancing. The lenders should also be able to see value in your argument without which it may not be too easy to avail this form of refinancing. It goes without saying that there are many obvious benefits as far as this form of refinancing is concerned.

NO APPRAISAL IS REQUIRED

Another big reason for opting for this form of refinance is the fact that there is no need for any appraisal as far as the streamline refinance is concerned. The homeowner’s first purchase price is used as the benchmark based on which the refinance amount is calculated. Further, in many cases there will not be the need for any credit report. However, as mentioned a few times above, the borrower must make sure that he or she has not defaulted on his or her repayments and there are no delinquencies in the account. However, there could be a few lenders who may be keen on having a look at your credit report and credit score before taking a decision to fund for this FHA streamline refinance.

THEY ARE POPULAR AMONGST FIRST TIME BUYERS

Many homebuyers who are buying homes for the first time believe that FHA insured streamline refinance could be a popular choice. This is because of a few reasons. This form of refinancing requires much affordable and easy down payments and the credit scores also need not be very high. We need to bear in mind that first time borrowers may not have been able to build a good credit score or a credit history. For them, the FHA streamline refinance is certainly a big boon. However, you need to bear in mind that these loans are not given by all lenders. Only those lenders who are approved by FHA offer this kind of mortgage loan.

HOW DOES IT WORK?

Once the mortgage has been signed, the borrower by default should be ready to pay 1.75% of the loan amount as an upfront fee. This also is known as UFMI. There also is an annual fee that is towards MIP or insurance premium as it is referred to. This in percentage terms works to around 0.45% of the refinance amount. However, it could vary and there are lenders who charge up to 1.05%.

This form of borrowing also has one more reason for being so popular. It can cut the refinancing paperwork as well as cost and this is applicable both for the customers and also the lenders.

The above are the main reasons for this growing popularity of FHA streamline refinance loans.

TYPE OF REFINANCES

You have basically two types of refinance available under FHA streamline. One is credit qualifying while the other does not require credit qualification or verification. There are some differences between the two types. When we refer to non-credit types of borrowers, it means that the borrowers can do away with the need to submit credit verification or job verification. However, we need to bear in mind that this facility is available only for those homeowners who have owned the property at least for six months. On the other hand, the other option is chosen by lenders when there is an increase in the mortgage payment by around 15 to 20%.

IT IS NON-DISCRIMINATORY

It would also be pertinent to mention here that FHA streamline refinance is non-discriminatory against religion, race, gender, and marital status. Any person who is using any public assistance or has any physical challenge or age-related problems also cannot be denied this refinance option. There are legal steps that the borrowers can take if they feel that they have been discriminated against.

CONCLUSION

With all things remaining the same as mentioned above, the most important need on the part of the borrower is to demonstrate adequately that he or she will be able to see some tangible benefit going through this option. There should be some visible financial benefit and this may require use of the right refinance worksheet to put one’s case beyond doubt. There are templates available and you also could take professional help if you want to make your case foolproof.