In recent times, streamline refinances are gaining a lot of ground and are increasingly beind used to avoid home foreclosures in USA. A refinance streamline mortgage is extremely beneficial because not only does it not require a complete credit report or an appraisal but it can also refinance any Federal Housing Administration (FHA) loan which has decent repayment and mortgage history. A streamline refinance is quick and hassle free and requires minimal documentation. It is however a rule of the FHA that the repayments on the new streamline FHA refinance must be lower than those of the existing loan. Consumers must bear in mind that it is in their best interest to see an FHA credit officer or lender to discuss your mortgage loan and the possibility of streamlining it.
FHA Loan Refinance Streamline Program
In most FHA loan refinance streamline programs, no underwriting is required owing to the fact that the loan balance is not increasing. However if the loan balance does increase underwriting will be needed and the HUD (Department of Housing and Urban Development) will be required to submit repayment history for 12 months. Streamline FHA refinances allow for individuals to be added to the loan without a review of their credit report. However in the event that you are looking to take someone off the loan, consumers might need to get the loan re-assessed.
Standard FHA streamline refinance requirements are listed below:
- There should be no cash taken out via the streamline refinance.
- There is usually no income or asset verification.
- The mortgage loan being refinanced must be insured by the FHA.
- The borrower’s repayment history must be current and up to date.
- The payments for the refinance streamline mortgage must be less than the existing mortgage unless the balance is increasing.
- In order to qualify, the borrowing party should own the property in question and must have had it for at least 6 months.
- The new refinanced streamline mortgage will have a term of 30 years or the remainder of the existing mortgage term plus another 12 years.
- A complete credit report is not required and there is very little underwriting that is required as well.
- It is mandatory that the client has not defaulted on any form of federal or government debt.
VA Streamline Refinance Program
IRRL (interest rate reduction loan) is another common name for the VA streamline refinance program loans. Most credit analysts regard this as one of the best loan products on the market as it is easy to qualify for and is designed for people serving active duty and for veterans with existing VA loans. This streamline refinance allows service members to get a lower rate and it is easy to qualify for. As long as the borrowers do not have more than 1 thirty day late payment on their credit report they can qualify for the VA streamline refinance. Just as streamline FHA refinance loans, these too do not require credit or income qualification and are quite easy to enter.
Feature of the VA streamline refinance include:
- There are no transaction costs involved in the VA streamline refinance loan.
- There is no income, job or asset verification.
- No credit qualification required.
- Borrowers are allowed to skip up to 2 payments
- The borrower’s existing loan must be a VA loan.
- Although no cash out is allowed with the loan, up to $6,000 in energy efficient improvements are allowed to be included with the loan.
A loan refinance has always been an alternative to bankruptcy and as you can see both FHA and VA streamline refinances are financial tools that can help borrowers get on top of their mortgages. With no credit qualification and minimal underwriting these loans are not only easy to qualify for but are also beneficial as they ensure that the interest rates are lower than the existing mortgage and so are the repayments. These refinance streamline mortgage loans will help consumers and service people get back in front of their existing mortgages and allow them to rebuild or maintain healthy credit reports.
References:
- Home Loan Guaranty Services – United States Department of Veteran Affairs
- Streamline your FHA Mortgage – U.S. Department of Housing and Urban Devlopment