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FHA Streamline Refinance Just got Better?

fha steamline refinanceFHA streamline refinance program has seen several new developments and at least one of the changes has been for the better.

Prior to these changes one of the requirements in regards to the FHA streamline program, was that the sum of all the liens on the home not exceed the geographical maximum mortgage limit for the property.

To put that in language that one can understand. There is a FHA maximum loan limit, meaning the maximum purchase or refinance value of the home FHA will work with and that maximum varies per county.

The maximum FHA mortgage limit for any county per FHA is $729,750, which is the mortgage limit for Los Angeles County, in contrast to that the mortgage limit for the county of Riverside is $500,000.

As you can see the maximum limit can vary widely per county. The FHA streamline option is a great way to refinance your FHA loan that may be in a negative equity positions as it does not require an appraisal, which makes the streamline seem like a slam dunk.

The one little caveat that would sometimes rear its ugly head is the previously mentioned one, in laymen’s terms, if the combination of all the mortgages or liens on the property was above the FHA maximum for your county you were out of luck on the streamline.

Per the BMCD mortgagee letter 10-36 released on 10/22/2010  http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/10-36ml.pdf BMCD has eliminated “the requirement that the sum of all liens not exceed the geographical maximum limit for both purchase and refinance transactions. Only the FHA insured first lien is subject to FHA’s maximum mortgage limits.”

To put that into understandable language, only the value of the FHA insured first mortgage (remember that the first must be a FHA loan in order to qualify for the FHA streamline) is subject to the maximum loan restriction of that county.

Finally a nice common sense change for the better.

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