It can be a bit confusing to try and remember all the weird lingo that gets tossed around the mortgage industry. We hear words and phrases like PITI, Streamline, docs, pre-qualify and pre-approval, FHA, Mortgage Insurance, Hazard Insurance and the list goes on.
One of the most common questions I get when they call to ask about streamlining their FHA loan, is “What’s a streamline?”.
This is great question, and the answer I tell my clients is: “When you hear Streamline think ‘Easier, Cheaper, Faster’”.
The bottom line is this; FHA is giving people the benefit of the doubt since they have already qualified once before for the loan.
SO because of this FHA allows you (Until November 17th 2009) to take advantage of the lowest rates available without having to fully qualify for the loan again. In other words you can skip much of the ‘jumping through hoops’ that happened when you first purchased the home.
These hoops that you skip can include: The appraisal, income documentation such as providing pay stubs, tax returns, bank statements etc., and some lenders even allow you to streamline without providing a credit score.
There are however some restrictions placed on an FHA streamline refinance. Because FHA is giving you the benefit of the doubt and not requiring a new appraisal of the property. You cannot exceed the original loan amount that you borrowed including the Upfront Mortgage Insurance Premium of 1.5% that FHA charges.
Additionally, you cannot remove a borrower from the loan via a streamline refinance. If you need to remove someone from the loan such as in the case of a divorce, the person remaining on the loan must re-qualify for the loan on their income alone.
Be sure to discuss with your Utah Mortgage Lender the different options you have available to you through the FHA Streamline program.
