FHA No Wait after BK, Foreclosure, Short Sale?
This loophole is available to anyone that has a FHA loan on an investment property or primary residence with a past financial hardship.
Many people complain about FHA mortgages and having to pay mortgage insurance. While this isn’t necessarily a complaint without warrant, having a FHA loan can also be life saver when rates drop.
FHA loans have the built in benefit of allowing you to reduce your interest rate with minimal paperwork, and in most cases, no cost to you.
As a result of the reduced paperwork, it’s possible for you to reduce your rate with a FHA streamline refi even if you had a recent bankruptcy, or foreclosure, short sale, or deed in lieu of foreclosure on an investment property or second home.
What’s the Catch?
You’re not breaking any rules or taking any short cuts, the reason you are able to do this is simple. There is no income, or credit qualifying for this loan program.
To qualify for a FHA streamline refi, there are minimum qualifying requirements which means that you do not have to pull a full credit report, and you do not have to complete a full loan application.
The lender will not even ask if you’ve had a bankruptcy, foreclosure, short sale or deed in lieu in the past.
It’s kind of like a “don’t ask, don’t tell” policy for home loans.
Qualifying for a FHA Streamline Refinance
In order to qualify for a FHA streamline refinance, you only have to meet the following criteria to be eligible:
- You must be able to reduce your mortgage insurance premium, or
- You must be able to reduce your interest rate by a minimum .50%, and
- You must have made a minimum of 6 payments on your FHA loan, or
- You must have made 12 months of on-time mortgage payments.
Paperwork for a FHA Streamline Refinance
The ability to provide reduced paperwork is a great convenience, and one of the most attractive features of the FHA streamline refinance program.
- Loan Application – This is the same application you completed last time you applied for a loan*
- Mortgage payment coupon/statement – Your most recent mortgage statement
- Homeowner’s insurance declaration page or agent’s contact information
- Copy of Driver’s and Social Security card
*Even though you have to complete a loan application, your loan officer will not ask for income information, and the “declarations” section of the application is mostly skipped. Your employment will be verified, but your income is not.
This Loan is Perfect For….
Homeowners that lost investment properties in the past, and are still current on mortgage for their primary residence. If you have a FHA mortgage, and you can lower your rate by .50%, and you have made your payments on-time, it may not matter when you lost a home to foreclosure, short sale or deed in lieu of foreclosure.
If you feel that you might have an opportunity to reduce your rate and payments, and you fall into this category? Feel free to ask questions below, or contact me directly.
For more detailed explanation of how to actually reduce your loan amount in addition to reducing your interest rate by a .50%,
Related FHA Streamline Article: No Cost FHA Refi Lowers Your Rate and Loan Balance?