HI Max. I had the same exact problem. I was told that NJ Housing Agency would have to subordinate the loan. When I called them and advised them that I would like to do a Streamline Refinance to lower my payment they told me that they will not subordinate. I advised them that my contract with them clearly states "If the borrower conveys, CASH-OUT REFINANCES or CEASES TO OCCUPY THE PREMISES AS HIS PRIMARY RESIDENCE, full repayment of principal and accrued interest will be due.
I told them that I am not trying to conduct a CASH-OUT refinance. I explained that I am not taking any cash-out and that I want to conduct a streamline just to lower my payments.
I was told that my contract should have read "ALL REFINANCES" and that the new contracts now state that.
I was furious. Shouldn't they have to be obligated to our contract? Our contract should be binding as these are the terms that were agreed upon.... more
Your question is one of contract law. There might be a mortgage rep who has walked through this before and can share their experience. But, your most accurate advice will come from an attorney who reads the contract terms in your file.... more
This is negotiable. The seller always want to close sooner then later. Any contract that has a closing before 60 days is in wishful thinking. Your lawyer knows how long it takes to close a mortgage (and FHA is not taking longer then conventional mortgages). They should make sure a realistic date is on the contract.
If you allow the mortgage officer to speak to the seller, they can let the seller know how long things are taking. Sometimes it is the seller who is delaying closing by not fixing things that are against the building codes in the area or peeling paint. When that happens your lawyer should let the seller's lawyer that they are delaying the closing process.... more
FHA is a great loan option. Here is a quick breakdown of FHA versus Conventional:
Minimum Down Payment = 3.5% FHA, 5% Conventional
Up-Front = 2.25% (until Oct 4th, then 1%) FHA, 0% Conventional
Monthly = .55% (until Oct 4, then .9%) FHA, .94% Conventional (may vary by area)
Qualifying = More forgiving FHA, Less forgiving Conventional
Credit Score = 500 Min Score (although investors normally require 620) FHA, 660 (with less than 20% down) Conventional
What I normally recommend, based on current MI charges, is that if you plan to put less than 10% down, FHA is a good option providing less down with a lower payment compared to Conventional. A lot of people are looking to conserve cash with the state of our current economy. A good way to do that is with less money down (FHA @ 3.5%) and with the FHA payment (less than Conventional when comparing minimum down, due to MI charges up to Oct 4).
If you have 10% or more down, Conventional is the better option due to the change in mortgage insurance charges. Instead of .94% it may drop to about .64%. That helps to drop your payment and make Conventional loans the better option. At 20% down Conventional is a must. Conventional with 20%+ down does not require mortgage insurance while FHA loans will.... more