We’ve gotten tons of questions from folks about the possibility that FHA is going to change the date for their “really really really” low FHA Streamline Program – allowing folks with Endorsement dates after the June 1, 2009 date to qualify for lower FHA PMI rates.
FHA mortgage rates are making new, all-time lows while — at the same time — FHA PMI rates are gearing up for an increase. This combination has fueled a spike in FHA refinance applications nationwide.
The Mortgage Bankers Association members reported that in September 2012, more than 54,000 FHA Streamline Refinance applications came in – more than double the number from one year ago.
For homeowners with existing FHA home loans, the timing is right to refinance via the FHA Streamline Refinance. Falling mortgage rates have offset rising FHA PMI rates for many folks… But that’s where the “rub” comes in for some folks who are wanting to do a streamline refinance – who have an endorsement date after June 1, 2009, and want to take advantage of a lower interest rate.
UPDATE: There could be good news this summer for folks who want to Streamline Refinance, take advantage of the program with lower FHA PMI rates, but have a FHA loan Endorsed AFTER June 1, 2009.
FHA Streamline Refinance : About The Program
The FHA Streamline Refinance is specifically designed for home owners who currently have a FHA Home Loan, and want better terms. The documentation is significantly less than most refinance programs, and there’s additional incentives for homeowners who have a FHA Loan that was endorsed by FHA prior to June 1, 2009. These folks qualify for a FHA refinance that has MUCH lower FHA PMI rates for a FHA Streamline Refinance than what we can offer anyone else.
The program does not require most verification’s (although in NC we are required to verify that you have a job). The FHA Streamline refinance also requires no appraisal. Basically, you have a FHA Home Loan, and this is a verification-less, appraisal-free refinance meant to help FHA-insured homeowners lower their monthly payments.
Getting a lower monthly payment (or better terms, like going from a 30 year to a 15 year) is an important condition for a Streamline Refinance Loan approval.
In its official program guidelines, FHA states that homeowners may not use the FHA Streamline Refinance unless their respective monthly mortgage payments are reduced by five percent or more. “Monthly mortgage payment” is defined as the principal + interest due, plus the accompanying monthly PMI.
What if you are one of those folks who has a mortgage that was endorsed AFTER June 1, 2009? Well, unfortunately with the way FHA PMI Rates 2013 have gone up, the Net Tangible Benefit for you will likely be negligible.
Most FHA Home Loans done in 2009 and 2010 have an annual FHA PMI Rate of around .55%. The Current FHA PMI Rate for the Annual Premium is 1.30% for most folks. On a $200,000 loan, that means you are currently paying roughly $91.66 a month in FHA PMI. With a new loan, at the 1.3% rate – your monthly FHA PMI payment would go to $216.66. Granted this is not an exact number, because the new loan is also going to have a 1.75% up front FHA PMI premium – but you get the point.
INVESTMENT PROPERTY – If you have a FHA Home Loan on a property that you are now renting out – we CAN help you with a FHA Streamline refinance on that Rental Home. We see many people who move around because of a job, and could not sell their previoius home. If you are in that situation,and you are looking for a way to take advantage of the FHA Home Loan program – we can do a Streamline Refinance for you.
How To Qualify For FHA Streamline Refinance
The FHA Streamline Refinance guidelines in North Carolina are pretty easy to understand.
Lenders following the FHA’s official published loan guidelines are only looking for three things. You must be able to answer “Yes” to the following :
- Have you made six mortgage payments on your current FHA mortgage?
- Do you have a 3-month perfect payment history on your current FHA loan, and no more than 1 mortgage late in the last 12 months?
- Are you lowering your monthly payment by 5% or more?
The reality is that in NC, we have additional requirements for loan approval (as set out by our State Government):
- Minimum credit score of 640 (in most cases)
- We must prove that you have income – but we don’t get an “income” statement, so you are not having to “qualify” for the mortgage.
Beyond that, nothing. No appraisals are required, we don’t need to know how much you have in the bank, or how much you make in Bonus income this year. So long as you’ve been paying as agreed for the last 12 months and so long as your mortgage payment is shrinking, FHA is happy to help you refinance.
Will FHA Extend the Endorsement Date of June 1, 2009
FHA recently announced that they are running in a deficit of several Billion dollars. They are taking steps to fix this next year, and they will change the FHA PMI program so that it never “falls off” the mortgage (which in our estimation is better than jacking the PMI rates up even more!).
It seems unlikely that the Endorsement date of June 1, 2009 would be extended – however, it CAN BE DONE without Congress getting involved. The President and the Treasury Secretary can make the changes, with current Funding Regulations in place.
Bottom line… if the US Economy Suffers because of (fill in the blank) Europe, Recession, Fiscal Cliff – WHATEVER, then the President COULD change the date, allowing more people to benefit from lower housing payments.
On the FLIP SIDE – if you have a mortgage rate above 5%, you DEFINITELY do not want to GAMBLE that anything will change. Go ahead and call, let us do the numbers and let you know if a Streamline FHA Refinance makes sense for you!
If you are interested in getting more information about refinancing your FHA mortgage, let us provide you with a FHA Streamline Refinance options! We will give you some of the best mortgage rates today and the lowest cost! Call Steve and Eleanor Thorne 919 649 5058. We work for a small Community Bank out of Virginia – and we would love to be YOUR lender today!