FHA Streamline Refinancing

FHA has permitted streamline refinances on insured mortgages since the early 1980's. The streamline refers only to the amount of documentation and underwriting that needs to be performed by the lender, 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.

Magic can offer "no cost" refinances (actually, 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.

Magic offers FHA streamline refinances that include the closing costs into the new mortgage amount. This can only be done 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 either be paid in cash or through the premium rate as described above.

Mortgage Insurance Premium (MIP)   (Tax Deductible)

Mortgage insurance is "tax deductible". In order to cover some of the costs incurred by HUD for FHA loans, HUD must assess the upfront and monthly mortgage insurance to the home buyer. This upfront fee may ranges from 2.0% to 2.25% (depending upon the term of the loan) and the borrower will have to pay 0.5% annually in mortgage insurance premiums. However, if you are buying a condominium, you do not have to pay the upfront mortgage insurance premium.