You won’t need much to qualify for an FHA streamline, but the items required are worth knowing.
You should have gotten a package of closing papers that include a copy of your deed of trust. When you get an FHA loan, there is an FHA case number that is printed on the first page. In order to get a new FHA loan, you’ll need to provide this case number to your lender.
Lenders will obtain a “mortgage-only” credit report to verify the payment history on your current mortgage. They may also ask for a current mortgage statement to prove that your most recent payment has been made and there are no late charges indicating you were behind on payments. One or two mortgage lates in the past will not necessarily disqualify you for a streamline refinance, so don't be discouraged if you have paid late.
This may seem obvious, but FHA does require that there be some financial benefit for you to complete the refinance. The minimum requirement is that you save at least 5% in monthly payments from your current mortgage. That means if your current payment is $1,000 per month, your savings has to be at least $50 per month to pass the test. You may also be eligible for FHA streamline refinancing if you’re replacing an adjustable-rate mortgage with a fixed-rate mortgage, or shortening the term of your loan to pay your loan off faster.
The FHA streamline program doesn’t allow you to increase your loan amount to cover closing costs, which means you may have to write a check to cover them at closing. Lenders may offer a “no-cost option,” but that simply means they will increase the rate enough to pay the costs on your behalf. While this keeps you from having to pay money out of pocket, the higher rate means less monthly savings.
The FHA streamline refinancing program does not allow you to take cash out when you refinance. If, for some reason, the credit your lender is giving you exceeds your total refinance costs, the most cash you can get back is $500.
Your current FHA loan most have been opened at least 6 or 7 months before you would be eligible for a streamline refinance.