The Federal Housing Administration (FHA) created streamline refinancing back in the early 1980’s to provide homeowners who have an existing FHA-insured mortgage a more efficient method of refinancing into another FHA-insured loan.
FHA streamline loans are similar to conventional refinance loans in that lenders are allowed to offer several different loan options. Borrowers can choose to pay their “closing cost” fees in cash to obtain the lowest possible interest rates or take advantage of a “no cost” streamline refinance at a higher rate of interest. You can also add your closing costs to your new loan if you have sufficient equity, but an appraisal will be required.
Although an FHA streamline refinance and a conventional refinance look similar on the outside, an FHA streamline refinance is quick and has minimal costs. An FHA streamline refinance application reuses most of the same paperwork that you used when you first obtained your FHA loan, including credit reports, income statements, appraisals, and inspections. This allows you to refinance your current FHA-insured mortgage even if the value of your home has declined significantly.
If you don’t currently have an FHA-insured loan, there are still plenty of options available if you want to refinance including conventional refinancing or applying for an FHA loan.