Did you or your spouse recently lose a job? Have you been putting off your FHA streamline refinance because you're unemployed? As crazy as it sounds, the fact that you're unemployed or have awful credit will not prevent you from taking advantage of lower rates or even converting your adjustable rate mortgage to a fixed rate home loan. Here's what you need to know about the FHA requirements for verification on your next streamline refinance.
FHA Streamline Refinance Requirements
One of the greatest benefits of paying on an FHA mortgage loan is the ease of qualifying for a streamline refinance. The Federal Housing Administration revamped their qualifications in an effort to help homeowners take advantage of lower mortgage rates and get out of riskier adjustable rate mortgage loans. Lower rates and safer terms mean more affordable payments and fewer foreclosures, hedging the government's bet on your ability to repay your home loan.
The FHA's official guidelines for a streamline refinance do not require employment verification, income verification, credit score verification, or even paying for a new home appraisal to qualify. This means that the unemployed, with terrible credit, can qualify for the streamline refinance.
OK, So What's the Catch?
Of course there's a catch, there always is. The Federal Housing Administration has a few requirements that you must meet to qualify. In order to be eligible for your FHA streamline refinance, you cannot have made your mortgage payment more than 30 days late during the three months before applying. If you have any 30-day, 60-day, or 90-day late payments in your recent history, you will not qualify. If you can bring your loan current and keep it current for 90 days, however, you can make yourself eligible.
There must also be a "net tangible benefit" to refinancing your home loan. The FHA defines this as lowering your mortgage principal, interest and mortgage insurance payment by five percent or more. Another way to easily demonstrate net tangible benefit is by refinancing your adjustable rate mortgage to a fixed interest rate.
Finally, the Federal Housing Administration requires a 210 day waiting period from the closing date of your original home loan.
Unemployment Is Not a Barrier to Streamline Refinancing
Because employment verification is not required for an FHA streamline refinance, you can still qualify regardless of how long you've been out of work. Also, if your credit has taken a hit (or six) due to late payments on other bills, that's okay too.
Remember, the FHA's official guidelines do not require a credit check, and uses your mortgage payment history to demonstrate your ability to repay. Protect your mortgage payment history as much as possible if you have to let payments on your other bills slide.
Finally, even though the FHA does not require income, employment or credit underwriting to approve a streamline refinance, mortgage lenders can impose stricter restrictions. You may have to contact several to find one that allows unemployed homeowners to refinance.
Today's FHA streamline refinance is one of the quickest and easiest mortgage loan programs around. Don't let your concerns about unemployment or your declining credit score prevent you from taking advantage of today's low rates or getting better terms on your existing adjustable rate mortgage loan.