FHA Simple Refinance vs. FHA Streamline Refinance: What's The Difference?

FHA Simple Refinancing and Streamline Refinancing Compared

The FHA Streamline Refinance is perhaps the fastest and most efficient way to refinance your FHA home loan. However, it’s not the only refinancing option available from the FHA; the Federal Housing Administration also insures another type of refinance loan, the FHA Simple Refinance. Like the Streamline Refinance, the FHA Simple Refinance is only available for current FHA home loan borrowers. However, unlike the FHA Streamline program, Simple Refinancing does require all borrowers to get a home appraisal. In this article, we’ll review more of the similarities and differences of these two FHA refinancing programs in order to help you decide which choice best fits your individual needs.

Similarities Between the FHA Simple Refinance and the FHA Streamline Refinance

The main similarity between the FHA Simple Refinance and the FHA Streamline Refinance is the fact that both of these loans are relatively easy ways to refinance FHA home mortgages, such as FHA 203(b) or 203(k) loans. They cannot be used to refinance any other kind of loan. Since they are both types of FHA loans, each of these refinancing products requires both a one-time, upfront MIP of 1.75% and an annual MIP, which can vary based on the size of the loan and other factors (such as LTV), but typically is around 0.85%.

Differences Between the FHA Simple Refinance and the FHA Streamline Refinance

As we mentioned earlier in this article, one of the major differences between these two loan types is the fact that Simple Refinances require a home appraisal, while Streamline Refinances do not. In addition, Simple Refinances (like initial FHA home purchase loans) permit up to 96.5% LTV for primary/principal residences, and up to 85% LTV for HUD-approved second homes. In contrast, Streamline Refinances permit up to 100% LTV/CLTV. In addition, the FHA Streamline program does not typically require a new credit score or credit qualification in order to apply for a refinance loan, while the FHA Simple Refinance requires a full credit check and for the applicant to be run through HUD’s CAIVRS credit reporting system. Overall, Streamline Refinances also require significantly less paperwork than Simple Refinances, making the application process substantially easier for borrowers.

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