FHA Streamline Rules Changing = Closing Window
FHA Streamline Refinances will take longer, be less convenient, and potentially cost more. Confused? Alarmed? We’ll explain:
What are FHA Streamlines?
FHA loans are, in essence, government-backed home mortgage loans that are insured by the U.S. Federal Housing Administration. The loans began during the Great Depression in 1934 after a spike in foreclosures and defaults, and have evolved over time into a valuable tool that boosts home construction, reduces unemployment, stimulates the economy and provides critical access to the housing market for thousands of people in the Dallas-Ft. Worth Metroplex.
FHA streamline refinances are simply refinanced FHA mortgages featuring less paperwork (you can skip steps like appraisal, credit check, and income and employment verification) because you’ve already basically proven to be a good credit risk for an FHA loan. Better underwriting then results in lower monthly payments (a great thing in this economy). FHA streamlines are flexible, affordable, and great for people with low credit scores.
So what are the new FHA Streamline rules, and how do they matter?
Basically, the changes are going to make FHA streamline refinanced mortgages more difficult to obtain. This means:
- You’ll have to provide a credit score, and your proof of employment and income will both be verified.
- You must have already made at least six payments on your current FHA loan.
- Your closing funds must be verified.
See the full HUD requirements here .
How long do I have to close on an FHA streamline refinance?
This matters because, well, the window for FHA streamline loans if you can’t meet some of these requirements is rapidly closing.
The new rules will go into effect for loans obtained after Nov. 18, 2009. After that, it’s simply going to be much more difficult and expensive to close on an FHA streamline refinance, so act soon (in fact, make sure you get the process started long before the Nov. 18 date to avoid missing the deadline). Contact one of our Dallas-Ft. Worth Metroplex-area FHA loan experts to see if a streamlined loan could work for you (and do it soon!).