The Federal Housing Administration (FHA) insures loans offered by approved lenders or banks to borrowers who have inadequate funds to make large down payments. Streamline refinance programs are the easiest way to refinance loans for those homeowners who have already been granted an FHA loan for lower monthly interest rates.

Streamline refinance programs have certain advantages:

• Borrowers are not required to calculate the debt-to-income ratio for the new FHA streamline refinance loan.
• Verification of income statements or asset records or an appraisal of the home that is mortgaged is nor required.
• Offered as a 5-year adjustable rate mortgage or a fixed rate loan for a period of 15, 20, 25, or even 30 years, the streamline refinance program has minimal credit requirements and might even be eligible for lower mortgage insurance fees, depending on when the current loan was obtained.

However, there are also disadvantages in the streamline refinance program, which are as follows:

• The FHA prohibits lenders from incorporating closing costs in the new mortgage amount of the refinanced loan.
• Similarly, since appraisals are not needed for refinancing loans, even if the value of the mortgaged property increases, it means a higher loan amount is not permitted.

The criteria for eligibility of FHA streamline refinance are as follows:

• Borrowers must own the mortgaged property for at least 6 months before qualifying for this refinance program.