Can I do an FHA streamline refi from a 30 yr term to a 10-15 yr term with little home equity?

My existing 30 year mortgage has a rate of 6.5%. I want to refinance this loan to a 10 or 15 year FHA through the streamline process to a rate of around 3%. I do not want cash out, only to reduce the interest rate and payment terms. Credit profile is excellent.

The first answer is almost correct. You can also streamline and maintain the same term. For example, if you are 6 years into the loan you can streamline to a 24 year term. The only rule is that you cannot reduce term on a streamline.

- Jason H. - Mar 4, 2012 at 3:35PM
2 Answers

Unfortunately you can not streamline a FHA 30 year fix to a FHA 15 or FHA 10 year fix. You can only streamline a 30 year to a 30 year fix. However, you are able to go go from a FHA 30 year fix to a FHA 15 or FHA 10 year fix by getting approved via full doc with income, appraisal and credit score. If you don't qualify that way, another option is do a streamline FHA 30 year fix to FHA 30 year fix and take the lower rate and just make higher payments to get the loan paid off in 15 years or 10 years.

Also need to remember that FHA requires a 5% net reduction in the total of the principal plus interest plus monthly MIP payment for streamlines, and that current MIP monthly rates may be up to double what you're currently paying. New FHA rules for streamlines are SUPPOSED to be released any day, will be interesting to see if they are of any benefit to borrowers in the 5% range who now may or may not qualify to do a streamline refi.