Is the FHA Streamline Right for You?

With an FHA streamline refinance loan you can refinance your existing FHA mortgage into a new FHA mortgage in order to take advantage of historically low interest rates. In some cases, an appraisal won’t be required, and the process can be completed relatively quickly.

Is it for you? Here are some things you need to know before you can make this important decision.

First, don’t count on walking away from the process with money in hand.

The FHA Streamline is a non-cash-out refinance, meaning that you can refinance the principal and some of the costs but can’t obtain cash. You must have what is called a net tangible benefit such as a lower interest rate or payment.

As with other types of mortgages, credit scores will drive this process. Depending on the lender, you will likely need a score in the 640 range.

Some lenders may go lower but will have other conditions. You also must be current on your FHA mortgage and must not have missed a payment in the last 12 months. Last, you need a debt ratio that is in line with guidelines.

Income is important in the process; in addition to good credit, your lender will want to know that you have the means to pay back the mortgage long term, even though you will have lower payments once the process is complete. That means you’ll have to provide the lender with pay stubs and tax returns, as you would with other mortgages.

Lenders will also want to verify your assets, as you may be asked to have money at closing for things like tax escrows.

Lenders are allowed to hold escrow money, often for 30 days. This means that you may have to give your new lender escrow money at closing, while your old lender will refund the money you’ve already given them.

Enhanced Version of HARP Offers Improved Way to Refinance

If you have tried to refinance but were unable to do so because the value of your home has declined, HARP 2.0 may be just the program you’ve been looking for.

What is it?

The new version of the Home Affordable Refinance Program (HARP) is a refinance program for mortgages that were sold to Fannie Mae or Freddie Mac on or before May 31, 2009. You may not have refinanced your mortgage under any HARP program, unless it was between March and May of 2009.

HARP 2.0 is an enhanced version of HARP 1.0. In HARP 1.0, the maximum loan-to-value ratio was 125%, which sounds good. However, for people living in areas that were particularly hit hard by depressed market values, the program was out of reach of many who wanted it. HARP 2.0 has more liberal ratios.


While some terms of the program are more relaxed, these are still full documentation loans; you need to show income and assets as you would with other type of mortgages. You also must be current on your existing mortgage and have been so for the previous 12 months.

Unlike HARP 1.0, if you currently have mortgage insurance, you may still be able to qualify for HARP 2.0.

Who offers HARP 2.0?

Most lenders offer HARP 2.0, and you don’t have to go to your original lender to use the program. If you would like more details on HARP 2.0, your mortgage professional is a great place to start.