If you have been hesitating about refinancing to get a lower rate or better terms on your home because it sounds like it would cost too much or be too much of a hassle, you might want to check out the FHA streamline refinance program. The FHA streamline refinance program is designed to make it the process of refinancing very quick, easy, and inexpensive for home owners who already have an FHA loan. Borrowers must already have a FHA mortgage to qualify for the Streamline. There is no appraisal or income documentation necessary, but the last 12 FHA loan payments must have been on time.
To qualify for FHA refinance loans, you have to have owned the property for at least six months. The process is inexpensive and easy, considering there is no appraisal. However, the no-appraisal refinance only applies if the loan does not increase in amount. There is no income documentation necessary. This is especially wonderful for those who have lost their jobs or are self-employed (with more difficulty proving income). You do have to have a good track record with your existing FHA loan, proven by fact that the last 12 FHA loan payments must have been on time. This is one reason borrowers must already have a FHA mortgage.
Even though borrowers must already have a FHA mortgage, they do not have to go through the same lender for their FHA streamline refinance. However, they do need to use an FHA-approved lending facility. The last 12 FHA loan payments must have been on time, but otherwise there is no income documentation and no appraisal necessary. Closing costs do apply and should be paid prior to the loan or rolled into a “no-cost” FHA loan. A “no cost” FHA streamline requires that there is enough equity in the home, so the overall loan amount does not increase.
FHA streamline refinance programs are the answer to lower monthly payments, lower interest rates, and financial relief for many American home owners. They are simple, with no income documentation and no appraisal required, but borrowers must already have a FHA mortgage and the last 12 FHA loan payments must have been on time. Saving money is the number one reason people refinance. Now, you can save time and money when you use FHA streamline refinancing from FHA-approved lenders and mortgage companies. Most FHA mortgage holders qualify easily. You can find out the current rates online or from your mortgage company.
With FHA mortgage insurance premiums rising, many people are begginning to notice that the benefits of FHA refinancing and home buying are being trimmed as monthly insurance payments begin to rise. FHA lenders and consumers are getting a little nervous about the hike on insurance premiums for FHA loan programs. As many of you have already heard, HUD is ready to implement increased insurance rates for FHA mortgage loan products.
So what do higher insurance premiums mean for FHA borrowers? If you are happy with your existing FHA mortgage and you have no intention of refinancing, it means nothing because your current insurance rate is locked in. However, if you are a borrower who currently has a FHA rate of 6% could refinance into a 5% loan and not save any money. The reality is that higher monthly insurance payments can swallow savings quickly. This is causing many homeowners and potential borrowers to rethink sitting on the sidelines for FHA interest rates to fall, because it won’t benefit them to refinance if the monthly insurance rates rise. Therefore we have seen an increase in FHA loan applications in recent weeks. The Lead Planet, a mortgage marketing company from San Diego reported that FHA applications were up over 10% in recent weeks. The surge of FHA refinancing is coming in from borrowers seeking new home financing and rate and term refinancing.
How will Higher Rates Impact the FHA Streamline Refinance Program? Many loan professionals believe that it puts this popular program at a severe risk, because with higher insurance rates, the benefits disappear.
With the housing market in shambles and rates going up, you have to question the timing of FHA’s plan to raise the monthly mortgage insurance premiums. But the trend of rising FHA rates also presents added incentive to refinance an FHA loan sooner rather than later. If you refinance now, you will not only lock in a low FHA mortgage rate, but the lower monthly mortgage insurance payment. Don’t forget that the FHA streamline refinance program does not allow borrowers to finance the closing costs, so you will need to come to the closing table with cash or find a lender that is offer a no cost refinance. Many FHA lenders are now offering special incentives for refinancing, but make sure that you compare the rates on both options. FHA streamline refinance rates remain very affordable, but expect to pay .125 or .25 higher for the no cost option.
The FHA streamline refinance is the hottest refinance program in the US right now for several reasons. Lenders continue to report that FHA streamline popularity is soaring because they are unique to the market-place. Consider a FHA streamline if you currently have a mortgage insured by the Federal Housing Administration. FHA streamline rates have never been lower and the efficiency for processing streamline loans has improved dramatically.
Take Advantage of the Flexibility and Affordability the FHA Streamline Offers
1. There are millions of FHA borrowers now so the streamline loan is a natural progression for homeowners that want to save money.
2. For most borrowers there is appraisal required, so thousands of borrowers are refinancing there underwater mortgages
3. Borrowers must be employed, but there is no income documentation required!
4. Our FHA lenders have reduced the fees for refinance loans. Some even offer no cost mortgage refinancing!
5. FHA mortgage rates have fallen below 4%!
FHA Streamline Program Guidelines
- Credit report will be reviewed for declining credit profile
- Excessive late payments, property in foreclosure proceedings, recently foreclosed, or in default, is considered a declining credit profile and will be declined
- Over 580 FICO – AVM max LTV 125% – NO appraisal required
- Under 580 FICO – Appraisal required, max LTV 90%
- Rate Price without FICO adjustments
- FHA Mortgage Terms: 30yr Fixed, 15yr Fixed, 5yr ARM
- Manufactured: AVM max LTV 90%
- No appraisal required if 12 payments made, 0×30, over 580 FICO
FHA streamline refinance notes: Ask about our self-employed mortgage options for FHA borrowers. FHA streamline guidelines are subject to change. FHA loan approval is required and borrowers must be able to document that they have been current on their FHA mortgage. FHA rates are subject to change and underwriter approval. FHA rate locks are recommended for 30 or 45 day locks. Check the FHA loan limits in your area, because the maximum loan allowed varies significantly by state and region.
The Federal Housing Administration has created many popular home loan programs over the years, but in 2010 none are more popular than the FHA streamline refinance. The FHA streamline enables borrowers to refinance without income documentation or an appraisal. Refinancing can be tricky these days with deflated income and home values so these features offer new opportunities for thousands of homeowners. FHA mortgage rates have declined to record lows in 2010 and most believe 2011 will be another banner year for interest rates. Lenders reported FHA streamline refinance rates below 4% on 30-year fixed rate mortgages.
FHA Streamline Benefits:
- Cost-Effective Refinancing
- FHA Streamline Rates at Record Lows
- No Income Documentation
- No Appraisal
When you are paying your home loan payment, you might find yourself in trouble sometimes. The reasons can vary, but in this economy, more and more people are having trouble keeping up with the basic payments that make up a regular life. The truth of the matter is that when you are behind even a little bit, the bills and expenses can really pile up, then you are buried in debt before you know it. At times like this, it can be tempting to do something drastic, such as declare bankruptcy or even become delinquent on your mortgage. Here is a word to the wise. This is not a way out, and it could result in you losing your home and not being able to buy a new home for years and years. This is why many people consider an FHA streamline refinance.
If you are unfamiliar with the FHA streamline refinance options, you should know that it is a program offered by HUD that allows those who are paying mortgages in the FHA program the option to refinance. For many people, this can be a lifesaver. It can lower monthly payments, therefore making it much easier to pay per month and to not fall behind. In order to get this kind of refinancing options, however, you have to make sure that you do have an FHA loan and that it is not delinquent. If you don’t fall into both of these categories, then you will most certainly be denied the refinance option.
You should keep in mind, however, that there are some negative aspects to the FHA streamline refinance. For example, when you lower your monthly payments, your mortgage will actually be much longer. This means that you can end up paying per month for thirty, forty, or even over fifty years. This is the kind of stress that many people want to avoid.
If you are considering the FHA streamline refinance option, then you will want to look at your finances closely and also look at the kind of money you will be bringing in the future. You will want to consider your long term goals and the kinds of other expenses you foresee in the future, such as children, illness, or other medical expenses. If you are a military veteran and have a VA mortgage, consider a VA streamline refinance.
FHA refinance activity rose once again this last month as homeowners continue to make efforts to lower their FHA rates and monthly payments. Homeowners like FHA refinance programs because the rates are low as the agency promotes fair lending and affordability. In a tough economy, many borrowers don’t qualify for a FHA streamline because they can’t afford to pay for closing costs and lender fees. Consider a no cost FHA streamline that is available to qualified borrowers who have not been late on their FHA loan in the last 12 months.
Fixed FHA Rates starting at 4%
To figure out the average interest rate, we consider the FHA mortgage rates on Monday through Wednesday of each week from FHA lenders around the country. FHA rates often fluctuate significantly, even within a given day. FHA rates on five-year adjustable-rate mortgages averaged 3.76 %, down from 3.79 % a week earlier. Rates on one-year adjustable-rate home loans dropped to an average of 3.64 % from 3.70 %. The FHA mortgage rates do not include add-on fees known as points.
- FHA Cash Refinancing
- FHA Streamline Refinance
- FHA for Home Improvements
- FHA for Refinancing
- FHA for Rehabilitation
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Take advantage of FHA’s flexible credit guidelines and streamline loan process and get approved for an FHA refinance today. As an approved FHA lender, we have the volume to justify the lowest FHA rates online.
The FHA streamline loan is a popular refinance option for homeowners that already have an FHA mortgage. The FHA streamline refinance has been popular because the FHA interest rates are low, the closing costs are affordable and the refinancing process is simplified compared to the long drawn-out measures of traditional refinancing. Borrowers need less paperwork, as income documentation and appraisal requirements are often reduced with FHA streamline refinancing.
It is no secret that the Federal Housing Administration has made significant efforts to make sure that qualified borrowers really want the FHA streamline refinance loan. Recently, FHA enacted big changes for the FHA streamline guidelines. Now borrowers that want to lower their interest rate with the FHA streamline must pay for closing costs out of their pocket. FHA does not allow borrowers to finance any closing costs when streamline refinancing. That means in most cases that FHA borrowers are covering the $2,000 to $3,000 in lending costs from their savings.
Did FHA go too far in tightening the Streamline Guidelines?
The thinking behind the streamline tightening is that by requiring borrowers to pay the closing costs out of their pocket that they will think twice before refinancing and loan defaults will decrease. FHA streamlines have never allowed cash out and they have not been a problem for defaults and foreclosures. With depreciating values nationwide it would appear that FHA is protecting themselves and borrowers from increased mortgage balances that would come from a borrower financing the lender fees and closing costs into their FHA streamline loan. For example, before the streamline guideline change if a borrower had $300,000 mortgage balance, it would be $303,000 after the refinance. If a borrower refinanced once a year, after a while the balance would be $320,000 and with declining values, this increases the risk as more homeowners would be underwater with their mortgages.
The No Cost FHA Streamline Solution
There are approved FHA lenders that are offering no cost mortgage refinance opportunities for a select group of borrowers. If you have good income and high credit scores above 700, there is a good possibility that you may qualify for a no cost streamline refinance in which the lender is paying for the closing costs on their end. This way you do not have to come out of pocket to cover the closing costs and your mortgage balance would not go up because you are not financing fees that FHA will not allow anymore anyways. Qualifying for no cost FHA streamline loans will take some shopping online to find a credible FHA lender that offers these unique refinancing incentives, but clearly it will be worth it financially in the long run.
Americans continue to be supported by FHA home loan programs for refinancing and new home buying. FHA loan programs are aggressive with little equity required for FHA refinancing. FHA finance programs have opened up many home buying opportunities because borrowers only need a 3.5% down-payment to become homeowners. FHA credit requirements are considerably more flexible than conventional lending allows. In 2010 FHA guidelines have tightened but FHA loan limits remain robust and underwriters are still able to approve loans based on the borrower’s history rather than just their credit score. FHA refinance loan programs have made an effort to reach out to distressed homeowners seeking a lower fixed rate mortgage payment to help prevent foreclosures.
- FHA Home Loans
- FHA Mortgage Refinance
- FHA Streamline
- FHA 203b for Cash Out
- FHA 203K for Home Rehabilitation
According to Jeff Moran, a FHA loan specialist with Bank of America Home Loans in Orange County, “The Federal Housing Administration continues to reinvent themselves and consumers are benefitting because they can get financed cost effectively with low rate FHA mortgages.”
FHA mortgage rates are available at 4.75% on fixed 30-year loan terms. There is no pre-payment penalty for early pay-off and if the FHA rates drop, you can always utilize the FHA streamline for rate and term refinancing. What are you waiting for? FHA loan programs are more appealing and more affordable than ever.
FHA home loans have been an icon for first time home buying since 1934. This government home financing initiative has been bolstering homeownership for decades with low FHA mortgage rates and fair lending criteria for all Americans. The Wall Street Journal reported that the Federal Housing Administration is in serious talks with HUD to raise the insurance premium in an effort to raise the dwindling FHA loan reserves. After FHA loan defaults have dropped for three straight months for FHA mortgage loans. If that trend holds, the agency could avoid burning through the FHA reserves, which are estimated to fall sharply over the coming years. Still, the FHA’s commissioner, David Stevens, says “there’s plenty of room for caution.” Clearly, FHA mortgage financing has not recovered enough to not be concerned about it’s future.
Are FHA Loan Programs at Risk?
As the economy continues to weaken, FHA will likely see more FHA defaults that could drain the FHA reserves even more. I would expect FHA loan requirements to continue the trend of tightening. This will limit the number of eligible borrowers to qualify for a FHA refinance that would lower their monthly mortgage payment and prevent home foreclosures for thousands of distressed homeowners.
Most industry insiders are forecasting additional losses because it has a much bigger exposure to housing today than it did when the housing market tanked three years ago. Even if the HUD continues to amend FHA loan guidelines to stem the FHA defaults, it is likely that the annual audit will uncover the fact that that the Federal Housing Administration continues to operate on low reserves. Let’s face it, if this great loan program was managed by the private sector the FHA loan program would be shut down. One bright spot is that the FHA’s finances are performing better than anticipated. In the last six months, FHA reserves have covered $6 billion that came from the loan defaults, but they had forecasted to pay $8.7 billion for loan defaults. Should we cheer because the FHA loan program is preforming better than anticipated or be critical of a federal loan program that is failing in a failing economy?
A frequent question from loan officers and mortgage brokers is in regards to the longevity of the FHA mortgage product. I received an email just yesterday from a FHA lender asking me the following, “Do you believe that HUD will pull the FHA loan programs for borrowers looking to refinance their home?” Since the subprime crash of 2006, there are still thousands of FHA mortgage brokers who rely heavily on FHA home refinancing. I wanted to address this in this article, because I believe that FHA lending is in jeopardy. FHA loan defaults have been climbing like the rest of the mortgage industry. FHA is a government home loan program and our government is in serious debt. The US government owns nearly 97% of all mortgage securities, so if the homes continue to be foreclosed upon because borrowers are not making their monthly loan payments, then it is safe to say that yes the future of FHA financing is cloudy at best.
Let’s take a look at the FHA loan programs at risk.
FHA 203B – This FHA loan program enables borrowers to get cash out up to 85%. FHA reduced it 10% from 95% cash out refinancing last year. It will be interesting to see if the 10% reduction helped reduce FHA loan defaults for borrowers who took cash out when they refinanced their home.
FHA Streamline – This legendary refinance loan is only for existing FHA borrowers seeking a rate and term refinance. HUD tightened the FHA guidelines by not allowing borrowers to finance the lender closing costs. FHA streamlines do not allow cash out and this new rule has significantly reduced the number of FHA streamline refinances in 2010. My guess is that the streamline program will survive if FHA survives.
FHA Home Loans – FHA goes hand in hand with first time home buying loans so it’s hard to imagine FHA would eliminate their flagship mortgage product, but if FHA loan defaults continue anything is possible. In 2009 FHA loan reserves dipped to dangerously low levels, so funding the FHA program must continue to pass through Congress. Last year FHA increased the down-payment requirements from 3% to 3.5%. I would anticipate that this will go to 5% sooner rather than later.
To HUD’s credit, FHA loan requirements for FHA lenders have increased dramatically. These changes were made to further solidify lending and weed out the shady or uncommitted lenders. As mentioned earlier HUD also mandated significant changes to FHA guidelines. Down-payment, home equity and cash out requirements were all tightened in 2009 and 2010. It is my contention that the FHA loan product will survive, but I believe we the tightening of guidelines is far from over.
After the subprime mortgage crash, FHA took on more lending with their FHA loan programs than any other type of home loan in the mortgage business. FHA guidelines have always kept an open mind in that they look at the borrower rather just the borrower’s credit score. This type of underwriting worked great when the FHA loans were performing, but as soon as FHA loan defaults rose to record levels in 2008 and 2009, something needed to be done to the FHA loan requirements to prevent the foreclosures and diminishing FHA reserves.
HUD decided to raise the FHA requirements and make some other changes with FHA guidelines in an effort to prevent the bad mortgages that first the first time since 1934 put the government loan program in jeopardy. The first change HUD made was to increase the down-payment requirements for home buying. The new FHA loan requirement for a down-payment was raised to 3.5%. HUD also limited FHA refinancing to 96.5% rather than 97%. Then the government agency decided it was not fair to roll lending fees into the FHA streamline loans. Next change came from FHA lenders who were starting to require higher credit scores. One good thing HUD did in 2010 was to keep the FHA loan limits unchanged.
We understand HUD’s moves to minimize the FHA loan defaults, but going away from the FHA credit guidelines and allowing FHA lenders to dictate higher credit scores may significantly reduce its appeal to home buyers and consumers looking to refinance into a more affordable fixed rate. Credit scores can be very misleading and someone needs to give these borrowers another shot.
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