If you currently have an FHA loan and you haven’t refinanced recently, take a minute and see if it would make any sense for you to lower your interest rate.
Right. This. Second.
Why?
Because the FHA streamline rules are about to change thanks to an a new announcement from HUD a couple of weeks ago that announced changes to the qualification criteria to the FHA streamline program.
For years and years, the FHA streamline program was designed as a “no income, no asset, no credit score no appraisal” refinance program that allowed people with an FHA loan to lower their interest rate without having to completely re-qualify for a new loan. Ok, so many lenders in the last year had started requiring credit scores, but not all.
But that all changed with the recent announcement.
And with the new changes, one of the big reasons that people in Arizona were lucky to have the streamline program will no longer be true. As you know, many people in Arizona who have bought a home in the last few years are in a situation where they currently owe more on their mortgage than their home is now worth. If they were lucky enough to have an FHA loan, that used to mean that the FHA streamline program was still a way that they could refinance into a lower rate. But soon, that will no longer be the case. Surety companies and mortgage bonds may become more prevalent.
With the new changes, anytime you do an FHA refinance streamline, you now are going to pretty much need to provide the same information you did when you first took out your FHA loan — income, asset, credit score information — and if you finance your closing costs (be sure to use a free mortgage calculator to see if it is worth it), you will need to also get a full appraisal.
The one bright spot in the announcement? The new rules take effect on November 17 of this year so you only have a little bit of time left to act.
If you hurry.
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Another great tip from Shar on this one. I wish I had an FHA to refinance! Another tip in regards to these refinances is you typically want to reduce your interest rate by about 1%. Otherwise it may not make the most sense for the refinance as you want the return on your investment of refinancing to work out in the positive in the end. Currently before these rules change as Shar mentioned, if you have a rate over 6% it is worth looking into the refinance. (As rates are now in the low 5’s)
If anyone has one of these loans and needs more details and or needs to refinance an FHA Streamline, let me know and I would be more than willing to help in anyway I can.
i am one of those people who have that type of loan,i have a 6.5 at the present. i am thinking about a streamline loan. i was told that i have to pay some type of tax in new york, is this true? ive had the loan for one year and have never been late on a payment, i would love to refinance so that i could reduce my monthly payments. i dont know if the new rules will be a hinderence. please advise me on a course.
Great post. After the dust has settleted with the new guidelines they are definetly more difficult but the overall product is the same. It is still a great loan product! The biggest changes in my opinion are the changes to the maximum loan to value, maximum mortgage amount and income requirements. There are much tighter restrictions on rolling the closing costs and escrows into the loan. Most borrowers do not want to come out of pocket with a lof of money at closing. Verification of inomce is now required on a streameline but it is limited documentation compared to a full FHA refinance or purchase loan. An appraisal is still not necessarliy required for a streamline refinance. That is still one of the biggest benifits. Don’t let the guideline changes scare you away. If you have a rate over 6% call your mortage professional and see if it makes sense. You probably still qualify we just may need a little more paperwork from you. Feel free to email me directly on any specific streamline questions that relate to your specific situation. colsen@castlecooke.com