Financing in Sacramento>Question Details

Tacobelle, Home Buyer in Sacramento, CA

Please advise on FHA streamline refi!

Asked by Tacobelle, Sacramento, CA Sat Sep 11, 2010

Currenly in a 5.5% 30 yr fixed FHA $282k for a year now. Should I refi to 4.5% same terms? Lender said they'd pay the fees, but I noticed the MIP rates (both for up front and monthly premium) are now higher than what I currently have, which is UFMIP 1.75%. Will the new FHA MIP rates diminish any benefits of a refi? Thanks.

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Thomas Young’s answer
Purchase new home or renovate your old one with 203k loan.
From my experience with 203k loans, the best advice is to use a lender that offers assistance via third party with 203k processing.
This shortens the closing time by weeks. Try http://www.cfs-mortgage.com/203k for more information.
0 votes Thank Flag Link Sun Jun 16, 2013
How do lenders make a profit if they do these refis with no closing costs? Is it built into a higher rate?
1 vote Thank Flag Link Fri Sep 24, 2010
I would recommend to you to not look to much at the "details" if you look at the fees t..how does it effect you , do you plan on paying the house off in 5 years?? most likely not..but if you are going to keep the loan for the full 30 years just focus on the monthly payment do you save 50 bucks month or maybe 100 bucks month? it all depends on how loan you will keep the loan.
0 votes Thank Flag Link Tue Sep 28, 2010
The reason 4.5% is inflated is because your lender is inflating the rate given to you so they can earn a higher commission/ie more profitable to them. If I was to lock your rate @ 4.25% I would receive approximately 1.75% of your loan amount $4,935 to be exact. I would give a credit to escrow of 3,200 to cover all non-reoccuring closing costs. You would simply bring in your mortgage payment to close escrow so there is no disturbance to your cash flow and your payment savings would be upwards of $170/month. If you want to chat more I can explain on the phone 707 217 4000. I don't feel it's appropriate to engage with folks acting unprofessionally, not you other people on this string.

Thanks,

Scott
0 votes Thank Flag Link Mon Sep 27, 2010
I have excellent credit - almost 800 - and I have steady employment history. I'm not worried about qualifying at all. I would just like to know if it's possible to refi without having to pay any of these fees. And for those who said 4.5% is inflated, how do you figure? How can I calculate if I'm saving at least 5%? My GFE shows I'll be saving $150.
0 votes Thank Flag Link Fri Sep 24, 2010
Gentlemen, please shake hands and agree to disagree.

Tacobelle, there are many ways to do mortgages, and every mortgage is customize to fit your particular situation. I hope you have found some answers to your questions.

Fhastreamline (a.k.a. Chris), if you wish to be taken seriously in this forum, you should consider writing a profile, uploading a photo, or simply just using your full name, to prospective clients can research you a bit or simply checked that you are licensed. In addition, please, do not call one of your industry colleagues names. That just makes us all look bad.

Respectfully,
Julie Thall
0 votes Thank Flag Link Fri Sep 24, 2010
Is this guy for real? LOL
0 votes Thank Flag Link Fri Sep 24, 2010
Hey everybody,

There is absolutely no way to do an FHA streamline refinance without verifying income. Not verifying income and doing stated income loans is what caused the biggest financial meltdown since the Great Depression. HUD does not allow FHA streamline refinance to be funded without verification of income. Think about it why would the federal government allow a loan without financial documentation to fund? We have a direct endorsement relationship with HUD. The reason that you must bring in cash to close escrow is that we have to set up a new impound account for taxes and insurance is because the loan to value cannot exceed 98% and if you purchased a home with 3/2% down you will be getting a refund for your current upfront insurance premium. Hope this helps and there's an old saying out there that if something is too good to be true it usually is. Good luck and I welcome any questions.

Thanks

Scott
0 votes Thank Flag Link Fri Sep 24, 2010
First off 4.5% is an inflated rate. I can do the same thing and pay all your fees at 4.25% on a 30 year fixed. When did you get the loan? The reason I ask is that if you took out the loan in the last few years you will only get a % of that money back to you as a credit through the close of escrow towards you're new UMFIP which is still based at 2.25%. I have a worksheet I can email you to show you the breakdown its pretty simple once you understand the numbers. HUD gives lenders a % chart which we use to calculate your UFMIP refund. My email is ssheldon@firstcal.net. Do refinance though and make sure whoever you use pays every fee- I mean title, underwriting, notary, processing, recording etc. You currently have an escrow I account which has $$ in it. You can look at your mrtg statement to see how much money that is. The lender will collect for a new impound account which will require cash to close at escrow, but you will receive a complete refund of the monies already in your current escrow account so you get reimbursed within 2-3 weeks from the close of escrow. Also this is HUGE- make sure you lock the loan for 45 days! Why? Because we are in September and you do not want to close this loan till the end of October (yes won’t have to pay the new insurance which increase on oct 4). The reason for this is because HUD will charge you for a full month’s worth of interest which means more money to close escrow. I do a significant amount of these on a monthly basis. Give me a call 707 217 4000 cell. I can walk you through this even if you go with another lender. I doubt anyone can beat 4.25% with no closing costs. I'll drive to Sacramento too if select me to handle your financing. Good luck !

PS I have several clients whose names I could give you who loved getting their streamlines done with me:)
0 votes Thank Flag Link Thu Sep 23, 2010
The way Barbara outlined your options is fantastic. It is clear and simple. I just wanted to add a slight correction to her facts. You just need an FHA case number to be issued on or before October 4th to be able to take advantage of the 2.25% Up Front Mortgage Insurance and the .55% monthly Mortgage Insurance. From there, and you have 6 months to close the loan...although sooner is always better.

For FHA case numbers issued October 5th and beyond, you are subject to the numbers outlined in her second scenario.

FInally, HUD protects you on these refis. We cannot do an FHA Streamline refi for you unless the net tangible benefit to you offers you a 5% monthly savings. Since your property taxes, monthly mortgage insurance and homeowner's insurance will all remain the same, hitting that 5% total savings is a challenge.

Talk to your lender, at least get them to issue you an FHA case number, and then start working.
Good luck,
Julie
jthall@lmglending.com
0 votes Thank Flag Link Mon Sep 13, 2010
Hi, Tacobelle

Have your lender of choice do a saving scenario to determine if it makes sense to refi now. Doing a no appraisal streamline @ a loan amount of 282K should save you over 200.00 a month. Your lender can also pull your FHA case # now to insure you're grandfathered against the MIP increase due in Oct.
0 votes Thank Flag Link Mon Sep 13, 2010
There are many lenders who do FHA Streamlines with NO appraisal so the comment below about the age of your appraisal does not apply. FHA is decreasing UFMIP to 1.0% and increasing MIP to .90% on 30 YR mortgages effective October 4th. Streamline refinances are designed to close escrow at the end of a given month to reduce the borrower's interest costs. In order to close a streamline by the end of September, most lenders required loan package to be submitted last Friday. I have one lender whose cut off date is September 16th. The reason you care about this is ... streamlines that close in October will be subject to the new .90% MIP. That monthly increase will remove any benefit of a lower interest rate for many folks.

Example of streamline closed by September 30th with 2.25 UFMIP and .55 MIP
Principal and interest = $1461
MIP = 129
Total = $1590

Example of streamline closed AFTER September with 1.00 UFMIP and .90 MIP
Principal and interest = $1443
MIP = 211
Total = $1654

The above was using your interest rate of 4.5% and financing the UFMIP. It does not include the pro-rata refund of old MIP and excludes property taxes and homeowners. But it does illustrate how the new FHA MIP will hurt many homeowers.

Bottom line ... make your decision QUICK and get your paperwork done so your lender can get your loan package submitted by September 16th.

All the Best
Barbara
0 votes Thank Flag Link Sat Sep 11, 2010
Caveat...the MIP for all FHA loans is going up considerably after October. I don't know how a re-fi will work, but right now, if you do not have an FHA case number by October 4, 2010 on a newly applied FHA loan, you will pay the higer MIP. The increase can be up to .9%. You also should be mindful that home values in your area may have gone down, so you might have to bring more money to the table. If your original appraisal is less than a year old, they may use the same appraisal. A realtor should be able to give you a market analysis of your home or you can go onto http://www.zillow.com and get a zestimate. That is what many banks look at these days. I would check with the lender. Have them give you an amortization schedule for both loans as well as a good faith estimate. Then you can compare apples to apples.

Good luck,

Brenda Feria
Real Living Eudailey Real Estate VA
Real Living at the Beach SC
0 votes Thank Flag Link Sat Sep 11, 2010
I also heard that on October 4th, FHA is bumping its MMI from .55 to .90 and it's 2.25 upfront will go down to 1%.

Elizabeth Weintraub
Broker-Associate #00697006
Lyon Real Estate
0 votes Thank Flag Link Sat Sep 11, 2010
The short answer is that the difference between the refund of your old MIP and the 2.25% new MIP will be the only cost of the refinance if your lender is truly picking up all the closing costs. Actually crunching all the numbers may demonstrate that you'll be back to even within two years BUT then you'll have about a 1% lower interest rate for the next 28 years. If you plan to stay in your home at least another two years then I say go for it. If you want to run this by another lender, I happen to know one with nearly 30 year experience in FHA. Call me or check out his blog
Web Reference: http://sacrelender.com/
0 votes Thank Flag Link Sat Sep 11, 2010
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