The “streamline” refers only to the amount of documentation and underwriting that needs to be performed. The basic requirements of a streamline refinance are:
● The mortgage to be refinanced must already be FHA insured.
● The mortgage to be refinanced should be current (not delinquent).
● The refinance is to result in a lowering of the borrower’s monthly principal and interest payments by at least 5% of the existing payment.
● No cash may be taken out
iLoan offers streamline refinances in several ways. Some are so-called “no cost” refinances (actually, no out-of-pocket expenses to the borrower) by charging a higher rate of interest on the new loan than if the borrower financed or paid the closing costs in cash. From this premium, the lender pays any closing costs that are incurred on the transaction. When done in this way, an appraisal is not required.
iLoan also offers streamline refinances that can 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. Investment properties (properties in which the borrower does not reside in as his or her principal residence) may only be refinanced without an appraisal.
- Common Work Orders for FHA Appraisals
- FHA Mortgage Insurance and Seller Concession Changes – Ramifications