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How Can I Reduce the Costs of My FHA Streamline Refinance Loan?

Call 562-888-0404 for more information about Buying or Selling Homes, Houses, and Real Estate in Southern CA, Long Beach CA. and Orange County CA

FHA Streamline Refinance Loans have been in the news quite a bit lately …

To this point, however, we have not seen anyone discuss the possibility of reducing the costs of those loans. So, with that in mind, we attacked that very thought. Can you save money on these loans? Check it out …

 

Is there a way to reduce the costs of my FHA Streamline Refinance Loan?

Eric: Let’s get into Scotty’s topic because I kind of like this one.

Scott: I remember when you showed it to me I was like what?

Eric: You know it’s a hot topic. It’s very hot.

Alissa: Pancake sizzling hot?

Eric: FHA streamlines are in the news a lot. Streamline, streamline FHA, FHA. This topic is in the form of a question. Is there a way to reduce the costs of my FHA streamline? So a lot of people when it comes to these things . . .

Scott: Did I present it that way? Did I write it that way?

Eric: Yeah. You wrote it that way.

Alissa: No, you didn’t.

Scott: You sure?

Eric: Yeah.

Alissa: That sounds like something you wouldn’t say.

Eric: That’s what you wrote. That’s what I have here. I think that most people think that FHA streamline and this is it.

Scott: I think the editor took care of it.

Alissa: Here’s the thing with FHA streamlines though they are . . .it’s formatted a certain way so that there is only so much that a lender can do, but Scott take it away.

Scott: OK. So, what I’m really talking about here is a specific program and the first criteria for FHA streamlines and a lot of people I don’t think they quite understand what streamlines are. I know that consumers still don’t trust lenders, because we get these phone calls all of the time.

Eric: Like what we talked about earlier.

Scott: Well, you’ve got all of the video commercials coming and all the direct mail coming and anybody that has an FHA loan is being inundated with this whole FHA streamline.

Frank: When they hear FHA streamline, I am thinking that a lot of people are hearing in their mind fast track.

Scott: It is. It absolutely is.

Frank: And that’s  . . . why don’t they just say fast track? So, people are really sure of what it is?

Eric: Oh, come on. Streamline is good too.

Scott: There’s like two pieces of paperwork. There’s no appraisal. There’s no income, no assets, none of that stuff. They are going to reduce your interest rates based solely, not solely but, mostly on the fact that you have continued to make your payments on time.

Eric: You’re a good guy.

Alissa: You are current.

Scott: Right. Now, one of the main criteria of being eligible for this is you have to see a 5% improvement in your payment or else they won’t let you do it. If you get better than a 5% improvement FHA won’t allow you to just lower the rate without touching the loan, essentially. It’s a super cool program. One of the challenges of this is by doing a streamline, you are now refinancing a loan with little or no paperwork, but the terms of the loan are going to change with whatever FHA guidelines are.

Alissa: And, that is because FHA guidelines have changed.

Eric: Does it start again? So you are back to 30 as soon as you do it?

Alissa: Yes.

Scott: Yes. It is a full refinance. Where the real tipping point on this is a couple of years ago FHA started really wrathing up their mortgage insurance fees. So the mortgage insurance premiums have been inching up and they just went up in April again.

Eric: So, you are going to get the new ones.

Scott: So, now the upfront is 1.75% of the loan and the monthly or the annual which goes to your mortgage payment is now 1.25%. So, you take your loan amount times 1.25% divide that by 12 that gets added onto your principal and interest payment. So, even though you have a 4.75% interest rate and you can get a 3.75% interest rate if your mortgage insurance goes up significantly . . .

Eric: It is balancing out anyway.

Scott: Right. So, there is a new program that just came out actually it just came out on June 7th .

Alissa: It said we can’t order docs until the 15th or something like that.

Scott: Right. No, June 11th. So, you can’t get a case number until June 11th, but after June 11th if your FHA loan was originated prior to May 31st of 2009 your monthly mortgage insurance was .55.

Alissa: You will be grandfathered that.

Scott: So, they are grandfathering that in.

Eric: Ah, cool.

Scott: So, you don’t have to take the 1.25%. You get to keep the .55 and this is even cooler,  you basically have no upfront mortgage insurance. I went from 1% in 2009 and now it is a .10%. So, it literally, nothing will be added to your balance, because the upfront mortgage insurance is added to your balance. So, if you owe $300K now and you add 1.25%, you are adding that money to your balance. Now your balance is $305K whatever. So it goes from 1% and you don’t re-incur that upfront mortgage insurance and you get to keep your monthly. So, if your loan was originate you have an FHA loan prior to May 31, 2009 and you start the process on June 11th of this year, then you get to keep the .55% and you don’t incur that upfront mortgage insurance. A super cool program.

Eric: So, as of June 11th of this year FHA streamline have gotten cooler.

Alissa: Well, they have gotten cooler now. The guy I was talking to this morning were doing that now. I would recommend if you had your case number for May31st, 2009 and that’s when you started, go ahead and start talking to your lender now so we can start collecting everything and get you ready. So, when June 11th comes, we can hit the ground running, because . . .

Scott: Remember talk to the lender first, because if they act like they don’t understand this and they accidentally get you a case number.

Eric: Find another one.

Alissa: Yeah, find another one.

Scott: No, you’re screwed.

Eric: Oh, because once they get a case number . . .

Scott: If they get a case number prior to June 11th  . . .

Alissa: You are locking in on the current.

Scott: So, how cool is that?

Eric: It is very cool.

Scott: I think we just broke that down.

Alissa: Now, I am saving people like $200. It’s ridiculous.

Scott: It’s insane, because in 2009 you’ll probably low 5s.

Alissa: What’s sad really . . . well, I’m not going to be a Debbie Doubter. Let’s just go.

Eric: OK. I’m not going to be a Debbie Doubter.

Alissa: I’m not going to do it.

Scott: In 2009, we were really high 4s and low 5s, right? So, now you are looking at under 4.

Eric: Cool. I like it I love it when we save people money. So, FHA streamline after June 11th.

Call 562-888-0404 for more information about Buying or Selling Homes, Houses, and Real Estate in Southern CA, Long Beach CA. and Orange County CA

 

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