The FHA streamline refinance loan gives the current fha loan holder the ability to refinance with out obtaining a new appraisal. FHA is allowing the borrower to convert the existing fha loan to a new fha loan with a longer term ( not greater than 10 years) and a lower payment. You can not do an fha streamline refinance loan to shorter terms with out completing an appraisal and qualifying on credit and income. FHA will not allow this. The idea is that you are lowering your payment and thus will be able to afford the lower payment.

FHA has changed guidelines effective April 2010 and now will only allow the principal balance of the current loan plus 30 - 60 days interest, plus the new FHA up front mortgage insurance premium, minus any refund from FHA on the FHA upfront mortgage insurance premium you paid on the existing fha loan.

FHA has permitted streamline refinances on insured mortgages since the early 1980's. The "streamline" refers only to the amount of documentation and underwriting that needs to be performed by the lender, and does not mean that there are no costs involved in the transaction.

The basic requirements of a streamline refinance are:

The mortgage to be refinanced must already be FHA insured.

The mortgage to be refinanced should be current (not delinquent).

The refinance is to result in a lowering of the borrower's monthly principal and interest payments.

No cash may be taken out on mortgages refinanced using the streamline refinance process.

Lenders may offer streamline refinances in several ways. Some lenders offer "no cost" refinances (actually, no out-of-pocket expenses to the borrower) by charging a higher rate of interest on the new loan than if the borrower financed or paid the closing costs in cash. From this premium, the lender pays any closing costs that are incurred on the transaction.

Lenders may offer streamline refinances and include the closing costs into the new mortgage amount. This can only be done if there is sufficient equity in the property, as determined by an appraisal. Streamline refinances can also be done without appraisals, but the new loan amount cannot exceed the original loan amount. Investment properties (properties in which the borrower does not reside in as his or her principal residence) may only be refinanced without an appraisal.

Detailed instructions to the lenders are contained in HUD Handbook 4155.1 REV-4, Change-1, Paragraph 1-12.

Contact your lender to get started. You can find your lenders contact information by clicking on our List of approved lenders.