Understanding the Basics of an FHA Streamline

An FHA streamline loan was designed to help speed up the process of refinancing. With an FHA streamline, you can eliminate a lot of the paperwork hassles that typically come with refinancing a house. If you have an FHA loan and you want to refinance quickly with minimal work on your part, an FHA streamline is most likely the way to go. Here are the basics behind an FHA streamline loan.

Streamline Requirements

In order to qualify for an FHA streamline loan, you have to fit a few different criteria. For one thing, you have to already have an FHA loan that you want to refinance. You cannot have a standard loan with no FHA backing and expect to be able to get an FHA streamline loan. 

In addition to that, the loan has to be in good standing with the bank. If your loan is delinquent, you will not qualify for the streamline process. You also have to live in the property for at least six months before you can initiate this type of refinance. 

With the streamline loan, they will only allow you to refinance if your objective is to lower your monthly mortgage payment. These are not "cash out" types of loans. They will only allow you to take advantage of the equity that you have created by lowering your mortgage amount and your payment. 

Benefits of Streamline

Using an FHA streamline loan to refinance is one of the simplest things you could ever do. The loan process is so much faster and easier than other types of loans. The verification that typically comes with a loan process is almost completely eliminated. Here are a few of the more prominent benefits of using an FHA streamline loan.

No credit check- When you already have an FHA loan, the FHA feels comfortable that you will still meet their lending guidelines. Therefore, they will not have to check your credit again for a second time. 

No income verification- This is a very big benefit as they do not check to see what your income is. They are basically under the assumption that your income is still in good shape because you have already been paying on a mortgage with them for some time now. 

No appraisal- Unless you want an appraisal, you do not necessarily have to get one with this type of loan. Since you are not getting any cash out, they know that the property is at least close to what they gave you the loan for the first time. Therefore, it does not matter what the exact value of the house is. This loan will be for less than the original loan amount was, so it should be fine. 

No cash- Most of the time, you can do an FHA streamline loan with no cash necessary upon closing. This allows many people who would be discouraged of refinancing to reap the benefits of a lower mortgage payment.