Which “Low-Doc” Streamline Refinance Program Is Best For Your Mortgage?

The Newsdesk
The Mortgage Reports contributor

Are You Eligible To Refinance Your Mortgage?

It’s an excellent time to be a U.S. homeowner.

Home values are climbing and have recovered all of last decade’s losses; mortgage lenders are approving more home loans than during any period since 2006; and, financing continues to be dirt-cheap for those in search of a home loan.

Mortgage rates continue to troll near all-time bests, putting millions of U.S. homeowners “in the money” to do a home loan refinance.

In today’s simpler mortgage market, demand for streamlined, “no appraisal” refinance loans have flourished, including the HARP 2 program and the VA Streamline Refinance.

These particular reduced-documentation programs — and others like them — have made the process of refinancing simple.

Need to choose the best streamlined refi for your home? Use this guide as your starting point.

Verify your new rate (Jan 26th, 2020)

What Is A Mortgage Refinance?

A “mortgage refinance” is the act of, literally, re-financing a mortgage; replacing the old loan with a new one.

In a refinance, the original loan is paid off and its terms satisfied in full. There are no further obligations to the original mortgage lender.

Instead, there is a new mortgage loan which exists as a replacement.

The new loan’s lender may be the same, or different, from the original one; and the loan’s features may be the same, or different, from the original one.

The traits of the new mortgage will depend on the wants of the homeowner :

  • Refinancing to a lower rate as compared to the original can lower monthly payments
  • Refinancing to take “cash out” can provide cash to reduce bills, or pay for home improvement
  • Refinancing to a shorter loan term as compared to the original can accelerate principal paydown

There are many reasons to refinance, but “to get a lower mortgage rate” is among the most popular.

With low mortgage rates — all things equal — monthly payments reduce, principal pay downs occur more quickly, and, over the long-term, mortgage interest costs decline.

Today’s 30-year fixed rate mortgage rates are low by historical standards. Millions of U.S. homeowners remain refinance-eligible and, with the economy gently expanding, mortgage lenders are eager to earn new customers.

Verify your new rate (Jan 26th, 2020)

Streamline Refinance Types : How They Compare

There are multiple refinance types available to today’s homeowners but among the most popular is the streamline refinance.

“Streamline refinance” is a generic term for a refi which requires less documentation than a typical home loan refinance. Because of this feature, streamline refinances are sometimes called “low-doc” loans.

Streamline refinances are known by different names, depending on the federal agency which offers it.

HARP (For Fannie Mae And Freddie Mac Loans)

The Home Affordable Refinance Program (HARP) is a streamline refinance for homeowners with mortgages backed by either Fannie Mae or Freddie Mac.

HARP’s eligibility requirements are as follows :

  • Your mortgage must have a note date of no later than May 31, 2009
  • Your mortgage must be current at the time of refinance
  • Your mortgage payment history may not include more than one late payment in the last 12 months

HARP refinances allow for unlimited loan-to-value on a fixed rate mortgage; and there is no specific requirement for a homeowner’s income, credit and employment to be verified.

The HARP program is available for limited time. HARP loans won’t be available after September 30, 2017 unless the program is extended via the White House’s “Better Bargain For U.S. Homeowners” plan — a plan which is sometimes known as HARP 3.

There is no timetable for the passage of HARP 3. It may never happen at all.

FHA Streamline Refinance (For FHA Loans)

The FHA Streamline Refinance is a refinance program available to homeowners with FHA-insured mortgages.

The eligibility requirements for the FHA Streamline Refinance are as follows :

  • The mortgage to be refinanced must be at least 210 days old
  • The refinance must have a “purpose” — a trait sometimes called a Net Tangible Benefit
  • Your mortgage payment history may not include a late payment in the prior 3 months

The FHA Streamline Refinance guidelines says that income, assets and credit are not verified; nor is employment. Appraisals are not required, either.

Via the FHA Streamline Refinance, homeowners whose FHA mortgage was endorsed on, or prior to, May 31, 2009 are eligible for special, reduced FHA mortgage insurance rates.

The FHA Streamline Refinance can be used on primary homes, vacation homes, and investment properties.

VA Streamline Refinance / IRRRL (For VA Loans)

The VA Streamline Refinance program is available to homeowners with VA-guaranteed mortgages.

The program’s official name is the Interest Rate Reduction Refinance Loan (IRRRL) and it’s backed by the Department of Veterans Affairs.

The eligibility requirements for the VA Streamline Refinance (IRRRL) are as follows :

  • You must certify that you previously occupied the home
  • Your mortgage payment must be reducing via the refinance, except for ARM-to-Fixed Rate refinances
  • Your mortgage payment history may not include more than one late payment in the last 12 months

VA Streamline Refinance guidelines state that income, assets and credit should not be verified; nor should employment. Furthermore, in most cases, home appraisals are not required to refinance.

Mortgage insurance is not required for the VA IRRRL, regardless of loan-to-value.

USDA Streamline Refinance (For USDA Loans)

The USDA Streamline Refinance program is available to homeowners with USDA-guaranteed home loans. The program is currently in “pilot”, and is not available to everyone.

The eligibility requirements for the USDA Streamline Refinance are as follows :

  • Your home to be refinanced must be your primary residence
  • Your home must be in one of the 34 pre-approved states
  • Your mortgage payment history may not include mortgage lates within the last 12 months

There is no income, credit, or employment verification via the USDA Streamline Refinance program; nor is an appraisals required.

As with HARP, the FHA Streamline Refinance, and the VA Streamline Refinance, underwater properties may be refinanced via the USDA Streamline Refinance program.

The USDA Streamline Refinance is currently available in 34 states. Those states are Alabama, Alaska, Arizona, Arkansas, California, Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Michigan, Mississippi, Missouri, Montana, Nevada, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Washington, West Virginia, and Wisconsin.

Get Today’s Mortgage Rates

Streamline refinance rates are comparable to “regular” mortgage rates. The advantage is the lack of required documentation, the waiving of appraisal, and the expedited time frame for closing.

Get today’s live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.

Verify your new rate (Jan 26th, 2020)