Is a FHA Streamline Refinance in Your Future?

Backtrack several years ago and home buyers had no shortage of 100% financing mortgage programs to choose from. In fact, we can remember wholesale lenders rapidly trying to one-up each other with the "best" new no money down financing solution. No credit? No way to verify someone actually had a job? No sweat...here's $300,000. We know where that type of lending (and borrowing) got us. Today, consumers are left with just a handful of low and no money down financing options including FHA loans, VA mortgages, and USDA rural housing loans. Unlike VA financing and USDA mortgages, FHA financing does require that a person hold some equity in a property. In the case of a home purchase, the current down payment requirement is 3.5%. FHA refinance loan-to-value requirements seem to vary by lender.

Back in 2005 and 2006, FHA loans represented less than 2% of the market. Let's face it, what mortgage originators and borrowers were eager to do a more labor intensive FHA loan when they could do a zero down mortgage with "more relaxed" underwriting guidelines. Now that almost all 100% financing options are out the window, FHA loans represent a large chuck of new originations. In 2009, NYTimes.com reported that FHA loan captured 17% of the market.

With mortgage rates recently slipping to 2011 lows, now might be a good time to look into an FHA streamline refinance. If a borrower already has an FHA loan, they may be eligible to refinance with little paperwork, possibly without an appraisal, and some companies may not verify employment or income. Plus, some lenders do not even charge an upfront fee for this type of loan. Meaning it may not cost you anything to refinance (although you need to consider moving backwards in your amortization).

You can check current 30 year and 15 year FHA mortgage rates online at ForTheBestRate.com. For additional information on FHA streamline refinancing, you can check out HUD's web site.

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