FHA Streamline Refinances & FHA loans in general in New Jersey - You need to know the facts -

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Mortgage and Lending with Social Media - Infinity Home Mortgage Company, Inc

 

More the reason why you need to speak to a knowledgeable professional loan officer

 

FHA streamline refinances - fha loans

 

With mortgage interest rates being so low, you would think many people are refinancing. And one would think that more would be doing FHA streamline refinances, because it should be so easy, hence the name streamline. Sorry to sound negative, but no and no, for many reasons.

There is also a mortgage myth, aka mortgage rumor, that FHA streamlines are cheaper than regular FHA loans. A complete lie. I just had a potential borrower that was told this. Yes, there are some lenders that advertise that FHA streamlines are quick with no costs. But mortgage alert, FHA streamlines are the same price. I talk to other loan officers from all over about this and they agree 100%. It just comes down to the type of sales person that you are talking to, and how they want to get you in the door. Just be careful of what you read and hear.

 

 

What are such reasons why FHA Streamlines sound so easy : (new mortgagee letter -Mortgagee Letter 2009-32)

Credit scores - FHA streamlines have a minimum credit score of 500. But most lenders/investors want a 640 + credit score.

Equity - You can do a FHA streamline while under water on your home, but you will need to pay for all of your closing costs. -Understand FHA streamlines-

Credit - At time of application, the applicant must have made 6 payments on their current FHA-insured loan. For mortgages with less than a 12 month payment history, the borrower must have made all of their payments within the month due. (this means no mortgage lates) For mortgages with a 12 + month mortgage history, the borrower must have a.) experienced no more than one 30 day late payment in the preceding 12 months AND b.) made all mortgage payments within the month due for the three months prior to the date of the application.

Net Tangible Benefit - The lender must determine if there is a net tangible benefit, determining if the streamline refinance makes sense, that it doesn't hurt the borrower financially.  There are some factors that are found in Mortgagee Letter 2009-32, under net tangible benefit. 

 

 

In regards to FHA loans in general, if you are doing a 15 year FHA mortgage and your LTV is 90% or less, you will not have monthly mortgage insurance. (New FHA mortgage insurance changes)  I spoke to a potential borrower yesterday that spoke to two other loan officers that never brought this up to him, as he was shopping for his mortgage when he inquired about 15 yr fixed rates.

Continuing with this person above who was shopping for mortgages. I was the third loan officer that he spoke to who had sent him good faith estimates two days prior. I sent mine yesterday and he followed up with me today around 1 pm. I had to say,"hey Mr. Borrower, rates got slightly worse today, so I need to send you a new cost sheet, aka the old good faith estimates." I then asked.. "by the way, did these other 2 loan officers call you or e-mail about any changes, which have happened yesterday and today?"  He said no....  Sorry people, this is a slight red flag, because these two other loan officers new that he was shopping around, because he told them. And mortgage interest rates have slightly gone up in the last week, but some loan officers won't tell you until you commit.

 

Summary : Very simple and very easy.  Just because someone promises the best, makes it sound like it's the cheapest way, or doesn't follow up properly, doesn't mean that your transaction will go smoothly. And unfortunately you won't know until the end or when it's to late. Not trying to scare you here, but just shop carefully and wisely. And use some of these tips.

 

 

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Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc

Comments (7)

Marilyn Boudreaux
Marilyn Boudreaux, Century 21 Bono Realty - Lake Charles, LA
Lake Charles LA Century 21 Realtor

Keep educating us Jeff! It is important to get this information out to consumers so they understand and realize when "shopping" around for the loan how to spot what is correct information. Just like most things cheaper is not necessarily better or beneficial in the long run.  It is scary because  the client discovers at closing uh oh Houston we have a problem.... then you are right its too late.

Sep 16, 2010 05:41 PM
Leslie Ebersole
Swanepoel T3 Group - Saint Charles, IL
I help brokers build businesses they love.

You need to write a book! I'll do the charts for translation to the rest of us: maybe FHA for Realtor Dummies...lots of pictures, easy words in short sentences. I'm calling you tomorrow....progress from two weeks ago....program definition coming along. Any videos yet? I'll bet you'd be great. Think of all your Realtor clients who could hang it off their website.

Sep 16, 2010 07:18 PM
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

 

MARILYN... . trying... it's tough and time consuming... but yes, spotting certain information can be tough at times. And yes, in some cases, cheaper is not always better.  I should have a post up on Zillow's Mortgages Unzipped that breaks a lot of this down... will be up in a few hours... let me know what you think.  thanks for your feedback.

LESLIE... . I know... it's been on my mind for 2 years now...  let me find time in my 40th hour of the day, when I have 8 days a week to work.  ;o)   And yes, I remember our conversation...   ;o)  Have ideas already, but it could take a few months.

 

Sep 17, 2010 03:08 AM
Tim Bradford
Cleveland, OH
NMLS 250013

Great post for consumers that are considering refinancing.  For home owners that want to keep their homes and are presently underwater, refinancing now at today's low rates is something to do.   I also believe that getting the process started before Oct 4 (when FHA's MIP is scheduled to change) is also a good idea if they plan on keeping the home for more than 4 years. 

Finally, when interest rates do go up a low rate on a FHA Loan could make the home more marketable to prospective home buyers because a new buyer could assume the low rate on the mortgage. 

I see this as a trifecta.  

  • Saving Money with a lower More Affordable Payment 
  • Home not being forclosed or a short sale
  • Potential future marketing opportunity. 
Sep 17, 2010 08:31 AM
Renée Donohue~Home Photography
Savvy Home Pix - Allegan, MI
Western Michigan Real Estate Photographer

You are such a mortgage myth buster Jeff :)

I didn't not know that about MIP on the 90% rule - good stuff as always!

Sep 17, 2010 12:36 PM
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

 

TIM... .  you make some excellent points... the only one that I kind of disagree possibly is the FHA assumables... if a seller wants to walk away with money, that assumption won't take place then, unless the buyer has cash. You can only assume the principal balance... so low rate or not... unless the house is underwater...  and thanks for the compliment..

RENEE,,, ,  please keep in mind, that is only for a 15 yr mortgage, not a 30 yr mortgage.  And thanks for the comment... want to hear another myth?  That you are a bad person... so I'll bust that myth right now.. Renee is the bomb digiddy...  ;o)

 

Sep 17, 2010 12:51 PM
Greg Miller
Ruoff Home Mortgage - Sarasota, FL
Florida Home Loans - Conventional,FHA,USDA,VA

Great Post Jeff- Another obsticle that I have been encountering with FHA refinances is the change in the monthly cost of Mortgage Insurance. For a lot of people that might be getting a better interest rate of "say .75%" . The potential savings could be wiped out with the added closing costs & an increase in their MI from .55% to .90%.

Nov 07, 2010 01:13 PM