FHA Streamline Refinancing

by Jay Dee from Colorado, USA

Ask Kate about FHA Streamline Refinancing: We had to move out of our property because of a work relocation. We want to use FHA streamline refinancing to lower our mortgage rate to 4.5 percent.


Jay Dee continues... The only problem is occupancy. Do you think we will be alright refinancing as long as we do not try to buy a new house? I have a renter lined up to move in already but we would be taking a small loss with our current 6.5 percent FHA home loan.

The broker we are working with is just telling us he did not hear the part that we moved out.

Kate Answers: FHA Streamline Refinancing

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Dear Jay Dee, Let's get right down to the nitty gritty.

Want to know why your mortgage broker is telling you he doesn't hear that you moved out of your house? He understands the significance of owner occupancy declarations.

Read this definition of investment properties on the FHA website:
"Investment properties are properties in which the borrower does not reside in as his or her principal residence."
Now I'm not the ethics patrol but I'm letting you know you don't want to fudge on owner occupancy declarations with FHA mortgage loans. For that matter, any home loan. You live in the house or you don't.

Mortgage companies have been known to check occupancy status after a home loan closes. If you declare you are living in the house but you've moved out, it could spell financial disaster for you.

Basic FHA Streamline Refinancing Guidelines

FHA Streamline Refinance is not complicated. Here are the five main highlights:
  • The mortgage to be refinanced must already be FHA insured.

  • The mortgage to be refinanced should be current.

  • The refinance should lower the monthly house payments.

  • No cash to the borrower at closing.

  • Investment properties may only be refinanced without an appraisal.

FHA Streamline Refinancing For Investors

Why fudge on owner occupancy status when FHA streamline refinances make provisions for rental properties! In fact, investment property owners are not required to purchase an FHA appraisal.

This isn't to say you'll get the identical interest rate or mortgage amount as an owner-occupied borrower. But you won't be placing your home loan in jeopardy either.

Choose A Mortgage Lender You Trust

So here's what I'd do! I'd talk to my mortgage broker about this. If he can't discuss that you've moved out of the house already, well... let me say this is a pretty good indication of what he knows about FHA loan requirements.

Here's more help understanding FHA. Solve the mysteries of government insured loans with additional articles from my FHA article series.
  1. FHA Refinance - Myths or Facts
  2. and
  3. FHA Loan Requirements- Yes! No! Maybe! Wait! Of Course! Never!
Jay Dee, one more thing. I'd like to hear back from you. Let me know if this page was helpful to you. Comment here on FHA Streamline Refinancing.

Or Ask Kate another question here.

Best wishes,

Ask Kate

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Comments for FHA Streamline Refinancing.

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Loan obtained, but may have to move out...
by: Anonymous

Hi Kate, you mentioned that lenders have been known to check on occupancy status of the home after the refi has been completed. In what way is this done? Do they go into your apartment and look at all the pictures and through your closets or something? Thank you.

Hi, Kate here...
Do they go into your apartment and look at all the pictures and through your closets or something?
I certainly hope not!

But banks can pick up on the altered residency status, for instance, when borrowers alert their insurance agent to convert their homeowner's policy into an investment property with landlord liability coverage or when the loan servicer is given a change of address.

Look through your current loan documents to see if you are still subject to an occupancy agreement. Generally speaking, they apply to the first year after the mortgage transaction closes. But due to exceptions, read your paperwork carefully.

Best wishes, Kate

FHA Streamline non-occupant owner - HELP
by: J. Scho

Hi Kate,
I work in the mortgage industry and really don't want to let this opportunity pass me by. I know we can refinance, principal only (no interest) - FHA streamline without an appraisal. I can't find a lender willing to do this. I tried my current lender who was stern about not doing this and pretty much told me I was wrong about FHA doing non-occupant owner properties. I also tried my real estate agent with no help yet. If you know of any lender doing these, I would greatly appreciate a referral.

Hi J., Kate here. Here are the guidelines to FHA streamline refinancing of non-owner occupied homes, found at HUD.gov, Chapter 2, Mortgage Credit Guidelines, Page 2-19, B.Streamline Refinances.
Investment/secondary property: for FHA financed properties that have become investment properties or secondary residences, a streamline refinance is only permitted without an appraisal. All other criteria must be met, however these properties may not be refinanced into an ARM.

But as you are finding out, some FHA approved lenders don't permit them.

It is going to take some elbow grease on your part to find a participating lender. Or who knows, maybe you'll get lucky and discover one quickly. Use my directions for finding a mortgage professional at Compare Interest Rates and Lenders Online.

Then run their names through NMLS Consumer Access to learn more about them. (NMLS stands for Nationwide Mortgage Licensing System.)

Hope that helps, Kate

FHA Streamline on non owner occupied houses
by: Anonymous

Hello Kate, I read your post about the streamline on a FHA non owner occupied house. I am in the same situation. I want to streamline but I cannot find a lender who will help me. All lenders are saying that I cannot streamline a non owner occupied loan. Do you know of any lenders who will do this for me? Thank you

Kate here. When financial and real estate markets go downhill, investment properties and condominiums are often the first to experience stiffer criteria and lack of funding.

One suggestion is to call your current lender. They may be more friendly since they own your mortgage. Have you tried calling a local Realtor who works in your neighborhood? They often are a good source of lender referrals since they work closely together to close real estate transactions. Good luck, Kate

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