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Streamline Refinance Requirements Tightening – Effective November 17

by Karen Lawson
October 19th, 2009

Although FHA (Federal Housing Authority) loans have largely replaced sub-prime mortgages, the agency is moving to reduce its exposure to home loan delinquencies by changing underwriting guidelines for FHA loans written under the agency’s streamline refinance program. The changes which are designed to document homeowners’ ability to pay for their refinanced home loans become effective November 17. There’s still time to apply and get approved for a streamline refinance under current FHA loan requirements, but don’t wait if you cannot verify employment and income.

FHA Refinance Guidelines Changing to Minimize Foreclosure Losses

Recent news reports indicate that FHA reserves are close to falling below the amount mandated by Congress. In a move to protect itself against future losses associated with defaulted mortgage loans, FHA is changing loan requirements for its formerly lenient “no (or very few) questions asked” streamline refinance program for homeowners whose present mortgage loans are insured by FHA:

  • Under current guidelines, FHA streamline refinance transactions don’t require verification of income and employment provided the mortgage loan is current at the time of applying for refinancing.
  • Homeowners will no longer be able to roll closing costs into the refinance loan amount without paying for a home appraisal. Current FHA guidelines do not require an appraisal.

Homeowners who’ve experienced a major loss in home value may experience difficulties in qualifying for a streamline refinance once new FHA loan requirements become effective.

FHA Streamline Refinance Program: Not so Streamlined Under New Rules

The new streamline refinance requirements may cause problems for homeowners with non-traditional credit, employment, and income. Requiring an appraisal is also viewed as an obstacle for homeowners whose property values have tanked and who need to include closing costs in their refinance amount. If you have these concerns, applying for a streamline finance now can help you avoid potential delays and expenses caused by new FHA loan requirements. Contact FHA mortgage lenders today for quotes on streamline refinancing; you can use free mortgage calculator tools for estimating potential savings and new payment amounts.

Low Mortgage Rates: Don’t Wait

No one can accurately predict mortgage rates will do, but they won’t stay at current lows forever. Take advantage of current mortgage rates (and the more lenient FHA refinance requirements today.

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This entry was posted on Monday, October 19th, 2009 at 2:45 pm and is filed under . You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

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