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Acceptance Capital Mortgage Corporation

FHA has offered a streamlined refinance program for their insured mortgages since the early 1980s. Streamline Refinance allows an FHA loan holder to refinance without being subject to the full process of underwriting. In most cases an appraisal is not required. The basic requirements of a streamline refinance are:
  • The mortgage to be refinanced must already be FHA insured.

  • The mortgage to be refinanced be current (not delinquent) for at least 12 months prior to closing.

  • The refinance results in a lowering of the borrower's monthly principal and interest payments by 5% or the conversion of an adjustable rate mortgage (1yr ARM) to a fixed-rate mortgage.

  • No cash may be taken out on mortgages refinanced using the streamline refinance process.
Lenders may structure streamline refinance transactions in several ways. Some offer "no cost" refinances (actually, no out-of-pocket expenses to the borrower). In these types of loans, the lender will charge an above par interest rate and use their additional compensation to pay for closing costs on behalf of the borrower. FHA does not allow lenders to include closing costs in the new mortgage amount of a streamline refinance with the exception of the up-front insurance premium paid to FHA. This fee is financed.

FHA Streamline Refinance loans may be underwritten with no appraisal. Instead, the FHA uses the original purchase price as your home's current value, regardless of what your home is actually worth today. Therefore, since current value is not a consideration in the underwriting process, you can refinance an FHA loan even if your home is underwater.

In 2012 FHA announced changes to their streamline refinance program that will benefit borrowers whose loans were endorsed by FHA on or before May 31, 2009. Eligible borrowers are not subject to current pricing for their monthly insurance charges (these charges are more than double what they were in 2009) and they pay only .1% for a new up-front mortgage insurance premium. FHA currently charges 1.75% for this fee. These benefits can save eligible borrowers thousands of dollars over what they would otherwise pay.

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