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Guide to FHA, 203K, and VA Streamline Loans fromApproved Mortgage Lenders

Streamline loans are a great way to get the financing youneed without the hassle of a fully documented home loan.The FHA streamline and VA streamline programs make itvery easy to refinance from one FHA loan to another or oneVA loan to another with very little new documentation. TheFHA 203K Streamline line is a simplified version of the full203K loan, making small changes to a home very simple andaffordable.



FHAStreamlineRefinanceMortgage



If you already have an FHA loan and wish to lower your ratebecause they have dropped since you originated yourmortgage, the FHA Streamline program is the perfect choice.This program enables you to avoid going through the long,arduous mortgage process all over again while still obtaininga lower rate to save you money every month. Thedocumentation requirements for this loan are very simpleaccording to the FHA. You do not need to provide any newincome documents nor a new appraisal – all of the originaldocuments may be used for the new program. However,certain FHA lenders will require new qualifications dependingon your situation, as a part of their lender overlay. Lendersthat do not require new documentation make it possible torefinance even if you changed jobs, your property valuedropped, or you have fewer months of reserves.



The largest concern regarding the FHA Streamline program isyour housing history. Lenders will either pull your credit orlook at your housing payments within their bank if you areusing the same lender for the refinance. In order to qualify, thelast 3 months of your housing history must be on time andthere cannot be more than one late payment in the 9 monthsprior to the last 3 months. In short, one late payment isallowed in the last year, but it cannot be within the last 3months.



The best time to apply for the FHA Streamline loan in orderto obtain the lowest rates is when the economy is doingpoorly because FHA rates directly coincide with the rate ofinflation. The better off the economy is at the moment, thehigher FHA rates become, but the worse the economydoes, the lower FHA rates fall. This is because this loanprogram is meant to help stimulate the economy; duringgood times, these loans are not as high in demand, but inbad times, they are greatly needed.



All FHA Streamline loans will require MIP upfront and on anannual basis. The rates differ depending on when youoriginated your first FHA loan. In general, if your current FHAloan originated before June 1, 2009, your MIP rates will be .01percent of the new loan amount as an upfront cost and .55percent of the new loan amount on an annual basis (dividedequally among 12 payments). If you obtained your FHA loanafter June 1, 2009, your MIP rates will coincide with today’scurrent rates of 1.75 percent of the new loan amount upfrontand .85 percent of the new loan amount on an annual basis(divided equally among the 12 month payments).



FHA 203K StreamlineRehab Loan



The FHA 203K Streamline loan is another loan offered by theFHA, but with a twist. This loan makes it possible to makechanges to your home and include the costs in your firstmortgage used to purchase or refinance the home. This loanallows you to make changes that cost up to $35,000 that arenot structural. This is a simplified version of the full 203Kwhich does allow structural changes and does not have adollar amount maximum; the maximum for the full loandepends on the value of your home and the changes youplan to make. The streamlined version of the 203K loanallows you to make quite a few changes with very little workon your part. You do not need to use a loan consultant andwill not need any blueprints or architectures involved.



Applying for the FHA 203K Streamline program is differentthan standard FHA loans because of the changes you willmake to the home. The lender needs to approve thechanges, none of which can change any structure of thehome. Along with the desired changes, you will need tosubmit estimates from a few contractors for the lender toapprove. The lender and the appraiser will then come upwith the proposed value for the home after the completedchanges. The lender will also evaluate the ability of thechosen contractors to complete the job based on theirqualifications.



Aside from the changes you wish to make for the home andthe contractor’s qualifications, you will need to qualifyfinancially for the program. The requirements are as simpleas they are for a standard FHA loan, however. You will needa credit score of at least 580, enough money to put down3.5 percent of the purchase price, a debt ratio no higherthan 43 percent on the back-end, and 2 or less late housingpayments in the last 12 months. If you have any specialcircumstances, such as a BK or foreclosure, you will have towait the specified time before applying for this loan.



Most of the allowed changes on the Streamline 203Kprogram are cosmetic, with the exception of things likeadding a porch or patio; fixing or replacing utilities, suchas a furnace; making energy efficient changes; orreplacing windows. Common changes on this programinclude changing out the flooring, painting the interior orexterior of the home, and non-structural changes to akitchen or bathroom.



VA StreamlineRefinance Mortgage



If you currently have a VA loan and wish to lower your rate, theVA Streamline loan is a great way to accomplish this goal.Typically, the original documents used for qualifying will applyto the new VA loan. The VA is most concerned with theamount of money you save each month by lowering yourinterest rate. The goal behind a lower payment is to increaseyour monthly residual income, which is what the VA uses toqualify borrowers for the streamline loan. The goal behind theVA program is to provide veterans and their families withaffordable housing that enables them to live comfortablyfinancially without struggle. The streamline program isavailable to those that could increase their disposable incomeby lowering their rate or refinancing from a risky adjustablerate loan to a fixed rate program.



The largest concern when applying for the VA Streamlineloan is your credit history – not the score. You are notallowed to have more than one late payment reporting inthe last 12 months on your housing or other debt history. Ifyou do have more than one late payment, you will have towait 12 months before you can apply for this program. Otherthan your payment history, the lender is able to use youroriginal qualification documents including your income andappraisal. The lender will need to make sure you still ownentitlement to the VA program, which they can supplythemselves. They will also need to determine that you willcontinue to live in the home you wish to refinance with thisprogram as it is only available on owner occupiedproperties.



Just like FHA loans, VA loan rates follow the market. Theworse off the economy is, the lower VA Streamline rates willfall, and the better off the economy is, the higher VA rates willgo. This is because, just like FHA loans, VA loans are meant tostimulate the economy and help the veterans that served ourcountry by providing them with an affordable way to purchaseand own a home. As is the case with any loan, however, yourindividual qualifying factors will determine how muchdifferent your interest rate is compared to the standard VArates offered. The riskier your loan profile, the higher yourinterest rate will go.



The VA Streamline loan, just like any other VA loan, requiresthe payment of a funding fee, which you pay at the closing. Ifyou are unable to put up the cash required for this fee, whichis 0.5 percent of the loan amount, you can roll it into the loanwithout hurting your LTV or current loan amount. In fact, youcan even roll your closing costs into the loan in order to makeit possible to bring no cash to the closing table, yet still loweryour interest rate and increase your disposable monthlyincome.



All of the government loan programs offered have amazingbenefits that you will not find with conventional financing. Thegovernment backs each of these loan types, but does notfund the loans – they simply provide a guarantee that they willback the lender up should you default on your payments inthe future. These loans are not just for first-time homebuyers,but are for anyone that needs affordable financing topurchase, refinance, or fix up their current home or a homethey wish to purchase.



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C L I C K H E R E



Justin McHood is Americas MortgageCommentator and has been providing

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Streamline lenders - Streamlinelenders.com

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