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FHA Mortgage Refinancing with No Equity


FHA offers loan programs for borrowers who need a FHA refinance loan but have no equity available because of the sluggish housing market.  The FHA streamline refinance is great for the homeowner that has a wants a rate and term refinance.  No cash out or debt consolidation is available with FHA streamline loans and certain restrictions do apply. To qualify for a FHA streamline, you must currently have a FHA mortgage that you are current on with no late payments in the last year. In late 2009, HUD made some changes to the FHA guidelines and a good payment history on your existing FHA loan is essential.

Let’s face it millions of homeowners owe more than their home is worth.  Fannie Mae and Freddie Mac offer the Home Affordable Refinance Program and the DU Refinance Plus program that FHA allows you to refinance your mortgage without an appraisal (so the fact that your house’s value has dropped like a piano from the roof is irrelevant) if you meet certain guidelines.

The FHA streamline refinance has been surging in popularity with FHA lenders because it meets the needs of so many homeowners that are blessed with an FHA loan.  FHA mortgage rates are as low as they have ever been and FHA loan companies have become much more efficient processing government refinance loans.

FHA Streamline Refinance Requirements

1. You have to have made at least six payments on your current FHA loan.

2. If you have had your FHA loan for less than 12 months, all the loan payments must have been made in a timely manner. If you have had the FHA mortgage for more than 12 months, you can have been late only once in the last year and must have paid on time the last 3 months.

3. Your new FHA loan payment must be at least 5% lower than your old payment, or you must be replacing an ARM with a fixed loan (the new FHA rate can’t be more than 2% higher) or hybrid loan (the new loan payment can’t be more than 20% higher), or reducing the term of your FHA loan, or reducing your interest rate by at least 2% (if replacing a fixed home loan with an ARM).

4. The property being refinanced must be your primary residence.

5. Closing costs for FHA streamline loans must be paid upfront (with the exception of mortgage insurance premium (MIP), which can be financed in the new loan.

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