FHA Streamline Refinance Change

By
Mortgage and Lending with George Souto NMLS #65149 FHA, CHFA, VA Mortgages NMLS #65149

Before I post the Charts showing the new FHA UpFront Premium and Monthly Insurance (MI) change that will take place on April 9th and further going up on June 11th, I think that I need to first post a chart showing the one good thing that FHA is doing in all the changes that they will be making.

Even with the interest rates as low as they have been refinancing has not been possible for many Homeowners.  That is because along with interest rates dropping so have home values, and therefore, not enough equity in properties to refinance with.  In many cases the value of the property has dropped below what the Homeowner paid for the property.  Even properties  that were purchased 5 or 6 years ago are facing this problem.

Homeowners in this situation a ray of hope at one time if they had an FHA Mortgage.  FHA has an option call a "Streamline Refinance" which allows for a Homeowner with an FHA Mortgage to refinance into another FHA Mortgage without doing an appraisal.  Therefore, the lack of equity in the property did not matter.  But when FHA changed the MI multiplier in late 2010, and went from a .55 multiplier to a 1.15 multiplier, it took away much of the reason to do an FHA Streamline Refinance.  The increased MI multiplier greatly reduced the saving that they would of have seen from the reduced interest rate.

But in the mist of all the crazy changes that FHA will be making starting the beginning of next month, they did listen a little, and decided to do something to help out these Homeowners.  On June 11 FHA will reduce the MI multiplier on all Streamline Refinance Loans that closed on or before May 31, 2009 back to the pre 2010 MI multiplier of .55, and decrease (almost eliminate) the UpFront Premium down to .01%.

This will be a huge opportunity for many Homeowners with FHA Mortgage to finally take advantage of the lower interest rates.  Hopefully this news will get out to these Homeowners, and Homeowner who are eligible to take advantage of this will start to call Lenders, and position themselves to take advantage of this change when it happens. 

Below is the chart reflecting this change, and the new loan does need to be for a term of 15 or more years.

Tomorrow or Thursday I will post the charts reflecting the other FHA UpFront Premium and MI changes that are not a good change, and greatly reduce the ability of particularly First Time Homebuyers to purchase a home.

 

 

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 Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Emily Medvec 03/06/2012 11:53 AM
Topic:
Lending / Financial
Location:
Connecticut
Groups:
Realtors®
Mortgages
What is New in Loan Products
Real Estate Rookie
The FHA Mortgage Group
Tags:
fha streamline refinanc

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Emily Medvec
Realty One of Santa Fe - Santa Fe, NM
Realtor | Serving Santa Fe & Northern NM

Excellent update and analysis of the upcoming changes in FHA and how there may be a silver lining opportunity for current FHA mortgage home owners who want to refinance. Suggested and reblogged.

Mar 06, 2012 11:49 AM #1
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Jeff Dowler
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude - Carlsbad

George

It's good we have people like you to keep us posted on all the changes - it's pretty hard to keep up. Good news for those with FHA mortgages wanting to refinance.

Jeff

Mar 06, 2012 12:44 PM #2
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Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

In anticipation of the change that will be here on June 11th, we have already contact our clients that will benefit from this change.

There are many folks that will benefit from this refinance opportunity.

Thank you for sharing the post with all of us.

Mar 06, 2012 07:07 PM #3
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Emily the benefit for FHA Borrowers with an FHA Loan prior to May 31, 2009 is huge.  I will being doing a follow up blog to this one later in the week showing what their savings will be.

Jeff I try to keep everyone up to date on any info I get.

Joe that is smart, I will be doing the same thing.

Mar 07, 2012 01:16 AM #4
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

CORRECTION

To those that have commented or read this blog already, I have just made a correct to it.  The UpFront Premium come June 11 for FHA Streamline Loans that Closed prior to May 31, 2009 is going down to .01% and not staying at the present 1.00%.  What this means is that basically FHA is eliminating the UpFront Premium on Streamline Loans on June 11.  The reason why they did not completely eliminate it is because according to some guideline that they have, there needs to be something in for UpFront.  But at .01% it is so low that it is almost the same as eliminating it.  Sorry for the initial mistake.

Mar 07, 2012 01:22 AM #5
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William J. Archambault, Jr.
The Real Estate Investment Institute - Houston, TX

George,

The correction is good news.

I've Bookmarked this one as a reference.

Bill

Mar 07, 2012 10:11 AM #6
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