This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

FHA Streamline Refinance: The Easiest Way To Refi?

If your current mortgage was endorsed by the FHA before June 1, 2009, the upfront premium is 0.01 percent of the loan amount, says Parsons. "It is a cost, but not usually an out-of-pocket cost, since it is almost always added to the loan balance," he says.

In addition to the upfront premium, these loans also require an annual premium -- paid monthly -- of 0.55 percent of the base loan amount.

FHA mortgages endorsed after June 1, 2009 have a much higher upfront premium of 1.75 percent. The annual premium varies by loan term and loan-to-value (LTV) ratio. It ranges from 1.25 percent (30-year term, LTV over 95 percent) to as low as 0.35 percent (15-year term, LTV under 90 percent).

Currently, the annual premium must be in place for at least five years, and after that time, it can be cancelled whenever the loan balance has been paid down to 78 percent, Parsons says.

Changes are coming

For FHA loans registered after April 1, 2013, the annual premium will increase by 0.10 percent, he says. In addition, the annual premium will have to be paid for the entire life of the loan if the initial LTV is more than 90 percent.

If you're considering a streamline refinance, act now before the April changes go into effect, says Parsons. Increased premiums mean fewer borrowers will be able to lower their monthly payment by the five percent requirement, he says.

Talk to your lender

Even though the streamline refinance program has more lenient requirements, some lenders will apply additional restrictions known as "overlays." For example, even though the FHA doesn't require income or credit verification, certain lenders lender might, says Auerbach. "Ask the lender upfront if they have overlays," he says.

The FHA frequently changes their programs, so it's important to talk to FHA-approved mortgage lenders to get the latest details and learn about potential overlays, says Auerbach.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs