Your Complete Guide to the FHA Streamline Home Loan
- SECTION 1What is a FHA STREAMLINE Loan?
- SECTION 2Am I Eligible for a FHA STREAMLINE Loan?
- SECTION 3FHA STREAMLINE Loan Benefits
- SECTION 4FHA STREAMLINE Loan Rates
- SECTION 5First-Time Homebuyers
- SECTION 6FHA STREAMLINE FHA STREAMLINE Loans
- SECTION 7Refinancing with a FHA STREAMLINE Loan
- SECTION 8Contract Guidelines
- SECTION 9The FHA STREAMLINE Loan Process
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What is a FHA Streamline Loan?
Video: The FHA Streamline Loan Process
The FHA Streamline Refinance is a mortgage refinance product through the Federal Housing Administration (FHA) that can help homeowners with an FHA loan to lower their interest rate and reduce their monthly payment. As the name suggests, an FHA Streamline is a relatively speedy and simplified process. The foundation of the FHA streamline is treated the same as an FHA loan once the process is done.
A FHA Home loan is one that is through the Department of Housing and Urban Development (HUD). Unlike conventional loans that are supported by Fannie Mae and Freddie Mac, FHA home loans are supported by HUD. HUD is a Federal Agency responsible for national policy and programs that address America's Housing needs, that improve and develop the Nation’s communities, and enforce fair housing laws. HUD has a record of accomplishments that spans more than 30 years. Thousands of communities and tens of millions of Americans have benefited from HUD's housing and community development programs.
FHA home loans have been streamlined through the years to provide access to the mortgage market for all types of buyers but especially first-time home buyers and buyers who might be credit and down payment challenged. A FHA home loan is a large sum of money lent to a borrower by a mortgage lender. FHA home loans often have higher lending requirements but the benefits of meeting those requirements are returned with competitive rates, down payment requirements, and competitive offers on your future home. When a prospective homeowner is ready to shop around for a mortgage, they will work with their Orbit Home Loan mortgage broker. This is a financial professional who brings together borrowers and lenders. They are not lenders and, as such, do not use their own funds to advance mortgage loans. Instead, they act as intermediaries, helping consumers comparison shop, bringing them a variety of quotes from different lenders at one time.
If you're ready to start your FHA Streamline loan, check your eligibility or have specific questions on the FHA Streamline loan, talk with an Orbit Home Loans specialist today.
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Loan Chart
How Do FHA Streamlines Loans Work?
FHA streamline homework like this: Your Orbit Home Loan mortgage broker (Mortgage Banker) works on your behalf to qualify you with the most competitive lenders in the nation. FHA home mortgages are typically lent out with 15 or 30 year repayment periods; the one that’s right for you depends on your personal finances, your income, and the interest rate you can secure. Once you are qualified, completed the process and have purchased the property your lender will sell your loan to HUD but still function as the servicer of your loan and will be responsible for collecting your payments. There is a possibility that your servicer may change so do not worry if that happens, it is normal. It is important to remember that your payments include your promise to pay back the lender with interest so they can pay HUD. An FHA streamline and FHA loan are treated very similar, but the difference are the document collections. When doing a FHA streamline loan you may be able to collect less documents to close your loan.
Interest is the percentage rate you pay to the lender and then to HUD for the trouble of lending you money. This is how the HUD and makes money from having lent you such a large sum. Interest rates are either fixed or adjustable and interest rates normally adjust daily but can adjust multiple times a day. The interest rate you receive on a conventional loan will also vary based on your own personal financial profile.
Not sure what type of loan is right for you? Use the tool below to help you find out.
Exploring the FHA Streamline Loan
FHA Streamline Loan
The FHA Streamline Refinance is a mortgage refinance product through the Federal Housing Administration (FHA) that can help homeowners with an FHA loan to lower their interest rate and reduce their monthly payment.
As the name suggests, an FHA Streamline is a relatively speedy and simplified process. Some borrowers are even able to skip the appraisal before closing.
If you currently have an FHA mortgage, the FHA Streamline Refinance is the easiest way to get a lower rate and monthly payment. The FHA Streamline is a “low–doc” refinance with limited paperwork required. The lender doesn’t have to verify your income or credit, and there’s no home appraisal. That means a Streamline Refinance closes faster than other loans and has slightly cheaper closing costs. Thanks to the FHA Streamline, borrowers with FHA loans have easier access to today’s low rates than most other homeowners.
What are FHA Streamline loan limits?
The maximum loan–to–value (LTV) for an FHA cash out loan is 80%. That means after the cash–out has been subtracted, you must still have 20% equity leftover in your home. So, you’ll need substantial home equity for a cash–out refi to be worth it. Mortgage lenders calculate LTV using your current mortgage and your home’s re–appraised value. Generally, the FHA cash–out refinance is best for homeowners who are sitting on lots of home equity but don’t have a high enough FICO credit score to use a conventional cash–out refi.
The conforming loan limit is designated by county. Most counties are assigned the baseline conforming loan limit. However, there can be variations on the conforming loan limit based on regional economic differences. Generally, the most you can borrow with an FHA loan is $420,680. That applies to single–family homes, with limits increasing for 2–, 3–, and 4–unit properties and in higher–cost counties. The maximum FHA loan amount for a 1–unit property in a high–cost area is $970,800. And for a 4–unit home, it's nearly $2 million.
What is the FHA Streamline funding fee?
Together, the Upfront Mortgage Insurance Premium (UFMIP) and the Mortgage Insurance Premium (MIP) make up the FHA funding fees. This is a necessary fee you must pay when entering a mortgage agreement which is backed by the FHA, in order to protect lenders from loss. So, you know that there are two types of FHA insurance. The first one which is charged up-front is called an FHA funding fee. Basically, this fee keeps the Federal Housing Administration in business. Actually, every FHA loan closing pays FHA 1.75% of the loan amount. With an FHA streamline there is an exception of possibly getting some money prorated if you refinance within the first 3 years of your original purchase.
Is the FHA Streamline loan a good option?
While it might sound too good to be true, the FHA Streamline Refinance is a perfectly legit refinance loan backed by the Federal Housing Administration.
How do I get a FHA Streamline Loan?
Talk with a trusted lender that knows FHA Streamline loans and how to get the most from this hard-earned benefit. The process typically starts with getting preapproved, which can often be done in minutes using your phone, laptop or tablet.
Loan pre-approval is a key first step before making an offer on your dream home. Having that preapproval letter gives you a clear sense of your buying power and shows sellers and listing agents you have what it takes to get to closing.
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If I’ve previously used a FHA Streamline loan, can I use it again?
Yes, this is not a one-time option. Once you earn the FHA Streamline loan benefit, it's yours for life. You can reuse the FHA Streamline loan over and over again, and it's even possible to have more than one active FHA Streamline loan at the same time.
Continue to learn more about FHA Streamline loan eligibility in our next section.