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California FHA Streamline Refinances without an appraisal just got easier to accommodate.

Since November 17 2009, Streamline FHA refinances have had traditional guidelines – prove income, provide tax returns, make sure the debt ratios are in line amongst others. As of June 9, 2010, many investors have informed their lenders that those guidelines have eased and frankly have been eased all along.

What does this mean to you and why is it important?

With most lenders, income documentation for wage earners and self employed borrowers is no longer required. Tax returns are no longer necessary. Debt ratios are a non-factor. You must still be employed as it will be verified.

Income documentation for those other than wage earners and the self employed include the following:

Standard FHA Streamline Criteria

The following items are necessary to refinance:

• Seasoning – At the time of loan application, the borrower must have made at least 6 payments on the FHA-insured mortgage being refinanced.
• Mortgage Payment History Requirements. The following requirements must be met without exception:
  • Loans with a 12 month payment history: 0×30 lates in the previous 12 months.
  • Mortgages with less than 12 months payment history: the borrower must have made all payments within the month payment is due.
• Net Tangible Benefit (NTB) Requirements: A net tangible benefit for the borrower must apply defined as one of the following:
  • Reduction in the total mortgage payment (PITIA) AND ALL SUBORDINATE LIENS = The new total mortgage payment must be 5% lower
    than the current total mortgage payment on the loan being refinanced. This requirement is only applicable when refinancing from a Fixed
    Rate to Fixed Rate, a GPM to Fixed Rate, a 203k to 203b and a 235 to 203b.
  • Refinancing from an ARM to a fixed rate mortgage =
    • The interest rate on the new fixed must not be greater than 2 percentage points above the current rate on a 1-year ARM.
    • For hybrid ARMs, the total mortgage payment on the new fixed rate mortgage may not increase by more than 20%

With the recent downturn in Mortgage Rates for California, the majority of FHA borrowers are seeing obtainable rates at or below the 5% level. This is a huge help for those that are in need of refinancing, want a quick alternative, require less documentation, less headache and want to take advantage of the lowest rates ever!

Who do you know right now that is in need of refinancing a FHA loan? Call for a free mortgage analysis.