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FHA Streamline Loans

A homeowner's obtaining an FHA Streamline Loan can be a financial tool for lowering a borrower's mortgage payments. To facilitate applications for FHA Streamline Loans, the borrowers should already have FHA loans to refinance. Otherwise, the borrower will need to have a conventional loan that he is applying to refinance. These FHA Streamline Loans also can lower the interest rates for a mortgage.

1. Conventional Loan - If the borrower has a conventional loan he wishes to refinance with an FHA refinancing loan, the borrower must apply by qualifying with the usual:
a. credit check,
b. employment verification,
c. debt-income loan ratio and other mortgage company requirements.
An FHA Refinancing loan could get the same result for the borrower, and if he refinances from a conventional loan to an FHA insured refinancing loan it is possible to achieve lower interest rates and thereby lower payments.

2. FHA Home Loan - For those who do have an FHA home loan, the other requirements for FHA Streamline include:

a. Being on time on the existing mortgage for the past year.

b. Applicant must have owned the original property for at least six months before refinancing.

c. An FHA-approved lender is necessary.

d. FHA Streamline loans do not require appraisals, but a loan without appraisal cannot exceed the current loan.

e. Closing costs must be fully paid up front or otherwise be paid through a "no-cost" FHA Streamline loan. Borrowers may include closing costs in their loan application as a "with appraisal" loan. There must be sufficient home equity to cover the extra amount of loan.

3. FHA 203(k) - There is another type of FHA loan for refinancing. FHA Streamline 203(k) Loan is similar to ordinary Streamline loans with a few exceptions:

a. The 203(k) has a minimum loan amount of $5,000 and maximum loan amount of $35,000. This amount can be added to your mortgage for weatherizing your home, removing lead paint issues and making home improvements that will not involve large alterations.

b. Borrowers must have at least one contractor to do the work. Self-help renovations made by the borrower are not allowed unless the borrower can prove he has certified expertise.

c. When hiring a contractor, FHA guidelines require an estimate which is itemized on the costs of each project. Contractors must also sign an agreement to perform all work included in their estimate for the amount estimated and within the time they have specified for the work.

d. Borrower must obtain all permits required by law.

e. 203 (k) Exceptions - Borrower cannot use the 203(k) loan to do major structural changes such as altering a load-bearing wall or for work requiring plans of an architect. If home improvement is over $15,000 the FHA requires borrower to have a third-party inspection upon the work being finished. Borrower can make two payments to each contractor and if borrower performs the work himself as a qualified builder, the same two payment rule applies.


Joe Canestraro NMLS # 219951,OH #LO.001509.000; FL #LO24523, Branch Phone 330 865 9600 Ph. Ext. 1
Home Loans and Refinancing for the States of Ohio and Florida.
The Money Connection, a DBA of Polaris Home Funding Corp. NMLS #38072, Phone (616) 667-9000.