When HUD changed the guidelines for FHA streamlines last fall,I thought they had pretty much stuck a fork in a program that has been very beneficial to home owners who have an FHA insured mortgage loan. You see, HUD made it to where if a borrower opted to not have an appraisal, they cannot finance their closing cost or reserves/prepaids. Back then I never thought we would see rates at their current levels. With today's rates, many home owners can opt for a slightly higher than "par" rate to have the lender pay for a portion of their closing costs. In addition, it doesn't matter what your home's current appraised value is since there is no appraisal!
With an FHA streamline refi, if the loan has less than 36 payments, there may be a credit of the balance of the upfront mortgage insurance premium if it was financed (99% of loans have the ufmip financed). The credit is on a sliding scale (the earlier in the loan, the larger the credit).
Closing costs are reduced since there's no appraisal fee (and no worry about what your home may appraise for). The loan amount is limited to the current principal balance plus the new upfront mortgage insurance premium. With today's pricing, many Seattle area home owners are typically bringing in the mortgage payment they would have "skipped" or funds to start their reserve account at closing and enjoying the benefit of a much lower payment due tot he reduced rate. Borrowers will receive a refund of the balance of their reserve account a few weeks after closing from their existing mortgage servicer.
FHA mortgage insurance premiums are set to change in weeks (October 4, 2010). Although the upfront premium is decreasing, the annual (monthly) is increasing and the net effect is more expensive that the current formula.
At Mortgage Master Service Corporation, we are a HUD Endorsed Lender with our own in-house FHA underwriters. I've been originating FHA loans for over 10 years and I'm happy to provide you a free rate quote for your home located in Washington state.
UPDATE: In order to qualify for an FHA streamline refinance, the borrower must:
- have an FHA insured mortgage
- have made a mimium 6 mortgage payments (seasoning) by the time they apply
- have a minimum mid-credit score of 620 640 (or higher)
- document income and employment
- document assets needed for closing
- Last but not least, the proposed refinance must create a "net-tangible" benefit to the borrower.