Streamline FHA Loan Refinance Lenders - Guidelines and Requirements

If you are planning on refinancing your current FHA mortgage using the highly flexible and fairly easy process afforded by the FHA streamline loan program, then you need to find a FHA approved streamline lender to handle your loan application. FHA streamline refinance loans are insured by FHA against losses that streamline FHA lenders may suffer due to borrowers defaulting on their mortgage payment obligations.

FHA stands for Federal Housing Administration, an integral part of the Department of Housing and Urban Development (HUD). Most of the FHA mortgage loans have convenient qualifying terms that are in line with the agency's mandate to expand homeownership. In order to originated loans for FHA programs, the lenders must be approved by the FHA to do so. Most FHA lenders can process streamline refinance loan applications for borrowers who meet the loan program's requirements.

In order to become eligible for a loan program, borrowers have to meet certain basic requirements. It is the duty of the FHA streamline lenders to ensure that all the FHA qualifying criteria is met by the loan applicants prior to funding the loan. If they do not carefully assess applicants and make sure that the borrowers meet all the lending guidelines, then the streamline lender may end up not getting the FHA insurance coverage benefits when the borrower defaults or ends up going into a foreclosure.

Benefits of FHA streamline loans:

FHA streamline refinance lenders handle all aspects related to your refinancing of an existing FHA-insured loan. As there are no significant documentation requirements, the loan process from initial application to closing takes no more than 30 days, in most cases. The verification of income, employment, assets and credit history, commonly needed for any home loan are not required. Even borrowers who may currently be unemployed, have no income or great credit score can qualify. An FHA appraisal required by other FHA loan program guidelines is also not necessary for streamline refinancing. The value of property is basically determined based on the purchase price, in case of original FHA purchase loans, or the recent appraisal value, in case of previous FHA refinances.

Your lender handling the streamline refinance will, for the most part, rely on the information that was submitted by you at the time of application for your existing FHA loan. The streamline lender will not pull a new tri-merge credit report or perform verification regarding your current job situation, income or assets. These relaxed guidelines allow lenders to quickly process refinance applications quickly, without much delays.

The only major requirement to become eligible for a FHA streamline loan is related to your payment history on your current FHA mortgage. There should not be any late payments in the preceding 3 months before applying for a streamline refinance. There should not also be no more than one late payment in last year before applying for a refinance loan. If you happen to not meet these requirements related to repayment history, the best thing to do is to wait till the time you can rectify these deficiencies.

If you need to find local streamline FHA lenders to handle your refinance loan application, the best to do so is right on the FHA website. The entire list of FHA approved lenders in any given area (zip code, city, county or state) can be found by using the online search form on the site. The different fields can be used to narrow down the large list of lenders to those that you are looking for. If you would like to go a little further and see how active and effective your FHA streamline lender has been over the past two years, you access their origination history, default ratio and other relevant info also on the HUD site.

When looking up the FHA lenders list, try to find out if the lender you plan on working with has the approval from HUD to do Direct Endorsement (DE). This is important as only DE lenders have the authority to not only process the application but also fund the loan without the need for a HUD approval, which can delay your loan application. Non-DE lenders have to gather all relevant info according to FHA streamline guidelines and then submit the complete loan package to FHA for final approval.

Before you consider other FHA streamline lenders, try to contact your existing FHA mortgage lender to see if they can process the streamline refinance for you. Doing so can make the process even more simpler and quicker for you.