Federal Housing Administration (FHA) Home Loan Program

An FHA loan is a home mortgage that allows for a purchase or refinance with a low down payment and is insured by the Federal Housing Administration.

Some of the benefits include:

• Down payment requirements are low.
• Borrowers can make the down payment with a gift.
• Borrowers can use down payment assistance programs for the down payment.

FHA Streamline Refinances

FHA has permitted streamline refinances on insured mortgages since the early 1980s. “Streamline” refers only to the amount of documentation and underwriting that needs to be performed by the mortgage company and does not mean that there are no costs involved in the transaction.

The basic requirements of a streamline refinance are:

• The mortgage to be refinanced must already be FHA-insured.
• The mortgage to be refinanced should be current (not delinquent).
• The refinance is to result in a lowering of the borrower’s monthly principal and interest payments.
• No cash may be taken out on mortgages refinanced using the streamline refinance process.

CharterWest offers streamline refinances in several ways. We offer “no cost” refinances (no out-of-pocket expenses to the borrower) by charging a higher rate of interest on the new loan than if the borrower financed or paid the closing costs in cash. From this premium, we pay any closing costs that are incurred on the transaction.

CharterWest also offers streamline refinances that include the closing costs into the new mortgage amount. This can be done only if there is sufficient equity in the property, as determined by an appraisal. Streamline refinances can also be done without appraisals, but the new loan amount cannot exceed what is currently owed, i.e., closing costs may not be added to the new mortgage with those costs paid either in cash or through the premium rate as described above.