As soon as the reduced mortgage insurance premium went into effect for FHA streamline refinances, some banks are saying no. Several major lenders including Wells Fargo, Chase, US Bank, BBT and others announced that they will not buy or refinance FHA loans from anyone other than those homeowners that they currently service. Wells Fargo was the first lender to address this and several others immediately followed.
A few other lenders are saying that they don't care who services your loan but they will charge an additional .50% fee for those loans.
There are still several banks that you can use if you want to refinance your FHA loan. If you are having trouble finding a lender to help you refinance your FHA streamline mortgage, keep looking! There are lenders that will help you without charging you extra to do so!
The immediate reaction is that lenders may not want non credit qualifying FHA streamline mortgages, which I can understand. However, they won't purchase credit qualifying mortgages either! This refinance is a wonderful program for those that have FHA loans. It allows for a much reduced upfront mortgage insurance premium (only .10%!! instead of 1.75%) and it keeps the monthly MI at the original rate of .55% instead of 1.25%.
If you do a streamline refinance without an appraisal, you can not increase your loan amount to cover your closing costs and prepaids. Most people are using the interest rate to pay those fees. That way there isn't any additional cash out of your pocket and you don't increase the loan amount – a no cost refinance. With FHA rates as low as they are, this is a terrific way to lower your monthly payment!
The one qualification for a streamline refinance is called a net tangible benefit. This means you must lower your payment by at least 5% (the principal, interest and mortgage insurance). If you are going from an adjustable rate to a fixed rate, you may be able to do that. However those that want to go from a 30 yr to a 15 yr mortgage may have a harder time showing that their payment has been dropped 5%.
If you have an investment property that has a FHA mortgage on it, you may be able to refinance that loan also. You can not add anything to the mortgage to cover closing costs, but you can still lower your interest rate.
If you have an FHA mortgage, now is definitely the time to look at refinancing your home. The mortgage must have been insured by FHA by June 2009, so that will affect some people. It is definitely a great time to look into your options!
Leslie Vanderwerf, NMLS ID#335509, Summit Mortgage - Email – Website
