arrow18 Comments
  1. james collopy
    Nov 01 - 2:02 pm

    My situation is almost identicial to the above scenario to the date & dollar amounts. However, I’m not 100% convinced it’s the best decision. Restarting the clock and the principal for what is only a inital 5 year $100 saving ($6k) ….. obviously the last 25 years see’s the real savings.

    • Rhonda Porter
      Nov 01 - 2:25 pm

      Hi James, obviously a lot will depend on how long you plan on retaining your home. It is a personal decision.

      I’m not sure why the savings would only be for “an initial 5 years”?

      • james collopy
        Nov 07 - 1:13 pm

        Thanks for your reply Rhonda. Sorry, I mean after the monthly mortgage insurance premium drops off (hopefully at 5 years but it could take much longer to reach 78% – perhaps not until 2023), then I would see additional savings of $200 for a total of $300.

  2. Jerry Harshbarger
    Nov 09 - 12:24 pm

    Rhonda, I don,t live in Washington, I live in Idaho, but my situation is almost identical, with one exception.We closed prior to June 1 2009. When we went to do a FHA Streamline, everything was fine until we found out that closing prior to June 1st 2009 isn’t the issue, it’s when you are funded by FHA, which can be several weeks or even months. Our lender never mentioned this and after going through the process of re-finance just to find out that we would have to pay the increased PMI, was frustrating. Am I correct or did I miss something.

    • Rhonda Porter
      Nov 10 - 8:51 pm

      Jerry, the originating lender would not know if your existing FHA mortgage was endorsed by HUD prior to June 1, 2009 until they have your previous FHA Case number. This can be found on your existing deed of trust.

      Do you still qualify to refi without the reduced mortgage insurance? HUD requires that your new PIMI is reduced by 5% to meet “net tangible benefit” guidelines (which I think should be dramatically changed).

  3. SR
    Dec 19 - 8:14 am

    Could you clarify this statement? “when the loan balance reaches 78% loan to value”
    I refi’d into a FHA loan from a construction loan on 3/10/10, with a loan balance of $329K, and the lender ordered appraisal came in at $395K. As of 12/2012, my loan balance is $321K. If I were to refi 1/2013, my MIP would fall of when my loan reaches 78% of $395K or $329k? Also, isn’t there a rule, that I have to pay at least 5 years of MIP, before I can get rid of it? Is that 5 years from 3/2010, or 5 years from 1/2013?

    • Rhonda Porter
      Dec 19 - 8:39 am

      Hi SR,
      With your existing FHA loan, your FHA mortgage insurance should drop off when your principal balance reaches 78% of the loan to value – since you had a refi, I would imagine this is based off of the appraised value. You also need a minimum of 60 payments before this happen. 78% of $395,000 is $308,100. You would need this to be your principal balance and 60 payments from 3/10/10.

      IF you refi to a new FHA loan in 2013, the FHA mortgage insurance will remain on the loan for the LIFE of the loan!! It will NEVER cancel. This is brand new with FHA. And watch for higher mi rates with FHA on newer loans. I have a few recent post on this on my blog.

      • SR
        Dec 19 - 8:57 am

        Just clarify, if I refi’d my current FHA loan using “FHA Streamline Refinance” in 2013, after 60 payments from 3/2010 my MIP can terminate, if my LTV is 78%? However, I refi’d from a non-FHA loan to a new FHA loan, the MIP will never cancel?

  4. SR
    Dec 19 - 8:58 am

    Hey, I just reread the article and saw your update, which answers my question. You’re the best!

  5. Nozima
    Jan 15 - 12:43 pm

    Dear Rhonda, thank you so much for a valuable article. You must be overwhelmed with several comments/requests, but I was wondering if you could point me in the right direction. If I refi my 30 year 5% fixed FHA loan, to 3.75%, I will be saving $232/mo (even if my monthly PMI more than doubles)

    How can I calculate in how many years my refi will breakeven? (taking into consideration all those PMI payments: upfront $8,750 and monthly $505) and if I refi by March, do you think I will make it before HUD changes it FHA regulations?

    • Rhonda Porter
      Jan 15 - 12:49 pm

      Hi Nozima, there are a couple different ways you can weigh your break even point.

      1. review an amortization schedule of the new loan to see how many months it will take to return to your current principal balance; or

      2. divide you monthly savings into your net closing cost.

      I prefer reviewing amortization schedules. I think option 2 is better when used for deciding if you should pay additional discount points.

      The upfront MI is probably financed (I’m assuming?) and you may be getting a credit of your current ufmip to help reduce that hit (check with your LO).

      I have no way of knowing when HUD will guarantee your loan – so I’m not able to provide an answer to your last question. 🙂

  6. george
    Jun 21 - 4:07 pm

    Hi rhonda, i have currently an fha mortgage with 20 year term that was endorsed before june 1,2009. I do have 16 years left on the loan. I oam trying to refinance my house for 25 years term using the fha streamline. I was told that fha will only allow me to add 6 years on top of the 16 years remaining on the loan, so basically i can only refinance for 20 year can term

    • Rhonda Porter
      Jun 21 - 4:46 pm

      Hi George, I believe the maximum mortgage Term for a streamline refi mortgage term is the lesser of: 30 years, or the remaining term of the mortgage plus 12 years

      • george
        Jun 22 - 12:38 pm

        Thank you rhonda.

  7. Lawrence Brown
    Aug 07 - 10:38 am

    I’m dealing with a client with an adjustable rate FHA mortgage that won’t adjust until Jan.1 2015. There won’t be a 5% savings with his current rate. Is this possible?

    • Rhonda Porter
      Aug 18 - 10:10 am

      Hi Lawrence, It’s very possible since HUD requires the savings to be based off of the principal,interest and mortgage insurance (PIMI) payment. I’m assuming since your client’s ARM won’t adjust until Jan 1 2015, that it was originated prior to June 1, 2009 – which would allow them to qualify for reduced mortgage insurance w/a streamlined refi. Today’s higher FHA mortgage insurance premiums may make it challenging to do a streamlined refi.

      Another factor will be the term of the current ARM. Here’s more info from HUD:

      What are the Net Tangible Benefit requirements for an FHA Streamline Refinance?

      For case numbers assigned on or after April 18, 2011 the lender must determine that there is a Net Tangible Benefit (NTB) to the borrower as a result of the streamline refinance transaction, which is defined as a 5% reduction to the monthly principal, interest and mortgage insurance payment (PI & MIP); or refinancing from an adjustable rate to a fixed rate (in accordance with the conditions in the Net Tangible Benefit matrix).

      FIXED
      Fixed to Fixed
      – Minimum 5% reduction in PI & MIP
      Fixed to One Year ARM
      – Minimum 2% interest rate decrease
      Fixed to Hybrid ARM
      – Minimum 5% reduction in PI & MIP

      ONE YEAR ARM
      1 Yr ARM to Fixed
      – Maximum 2% interest rate increase
      1 Yr ARM to 1 Yr ARM
      – Minimum 5% reduction in PI & MIP
      1 Yr ARM to Hybrid ARM
      – Minimum 2% interest rate decrease

      HYBRID ARM (During Fixed Period)
      Hybrid (Fixed Period) to Fixed
      – Minimum 5% reduction in PI & MIP
      Hybrid (Fixed Period) to 1 Yr ARM
      – Minimum 2% interest rate decrease
      Hybrid (Fixed Period) to Hybrid ARM
      – Minimum 5% reduction in PI & MIP

      HYBRID ARM (During ARM Period)
      Hybrid (ARM Period) to Fixed
      – Maximum 2% interest rate increase
      Hybrid (ARM Period) to 1 Yr ARM
      – Minimum 5% reduction in PI & MIP
      Hybrid (ARM Period) to Hybrid ARM
      – Minimum 2% interest rate decrease

      Reducing the term of a mortgage is acceptable on a streamline refinance if the new mortgage meets the net tangible benefit test.

      Handbook 4155.1 6.C.5

  8. Miguelin Riva
    Dec 16 - 5:44 pm

    Good Afternoon,

    I’m looking to do a streamline for my current properly. I bought the house in August 2009 which means I’m not qualified to the streamline reduced rates. My current APR is 5.25 and wondering if I should sell the house or doing a streamline. What can I do? What is the best scenario and/or worse scenario for my situation. Please help.
    What is the current APR for streamline? I have a FHA insure home loan.

    Thank you

    • Rhonda Porter
      Dec 16 - 5:48 pm

      Hi Miguelin,
      I’m not able to provide advice for your situation without more details – including:
      (1) is the home located in WA state? (I’m only licensed in WA and cannot provide a quote for homes located outside of Washington state). If your home IS in Washington:
      (2) what is your current loan amount and estimated credit scores (for a rate quote)
      (3) what is your current total mortgage payment?
      (4) how long do you plan on retaining the home? What is your current estimated balance of the home?

      Thanks!

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