April 6, 2017
When talking to your loan officer about your options there
will be conventional and government-backed loans. Conventional loans are those
underwritten to guidelines established by Fannie Mae and Freddie Mac and are
the most common. Government-backed loans include VA, FHA and USDA home loans
and offer low or no-down payment financing options for a primary residence.
Conventional loans can be used to finance a primary residence, vacation or
second home or a rental property. However, when it comes time to refinance,
government-backed loans have a feature conventional loans do not called a
A streamline is so-called because during the refinance
procedure there is much less paperwork required. And that’s just for starters.
Streamline loans don’t require an appraisal nor is income and employment
verified. Let’s take a look at streamline options.
referred to as the Interest Rate Reduction Refinance Loan, or IRRRL, the VA
streamline waives the requirement for income documentation and employment,
eliminates a minimum credit score requirement as well as not requiring an
appraisal. As long as the borrower is refinancing to a lower rate or
refinancing from an ARM to a fixed, the streamline can be used.
USDA. Like the VA
streamline, the USDA loan has a similar streamline feature and is now available
in all 50 states after a test rollout in selected areas. Like the VA loan,
there is no appraisal required nor is income or employment checked.
FHA. The FHA
streamline refinance does not require an appraisal nor is income and employment
verified, similar to the VA and USDA streamline programs.
These streamlines can only be used in a “like for like”
transaction. That means an FHA streamline can only be used to finance an
existing FHA loan. Likewise, USDA streamlines refinance an existing USDA loan
as well as a VA-to-VA transaction. Lenders can also verify there has been no
more than one payment made within the previous 12 months that is 30 days past
the due date and no such lates in the past six months. Because there is so
little paperwork involved, streamline loans can close in a matter of days, not
For more information or questions about mortgage loans, please call (855) 757-8748