On Tuesday (March 6, 2012), President Obama announced a cut in mortgage insurance fees on many current FHA government-backed mortgages. Up to 3 million homeowners could save over $1,000 per year through a less-expensive, turn-key refinance program currently offered by FHA.
This is the latest step President Obama has made to assist struggling homeowners, following the announcement of the HARP 2 Refinance Program in November 2011. The purpose behind both of these programs is to help homeowners refinance out of high-cost, and possibly adjustable interest rates into lower cost, low-rate, secure programs.
So What Changed?
Under the former FHA refinance guidelines, FHA required an upfront mortgage insurance fee of 1% of the loan amount, along with an annual mortgage insurance premium of 1.10% (divided monthly = monthly mortgage insurance fee).
Under the new FHA streamline refinance, the upfront mortgage insurance fee will be reduced to 0.01%, and the annual mortgage insurance premium fee will be cut in half to 0.55%.
How Much Will I Save With the New FHA Refinance?
A borrower refinancing a mortgage of $200,000 will save more than $1,300 a year with the new FHA refinance. Please note – This is JUST comparing the new savings from mortgage insurance premiums. In addition to these savings, there are notable savings from the lower interest rate the borrower gets through the refinance.
That means a borrower who refinances a $200,000 mortgage at 4 percent interest would pay about $1,046 per month, compared to about $1,157 per month under the past FHA guidelines. A savings of about $110/month on just mortgage insurance alone!
How Do I Know If I Qualify For the New FHA Refinance?
(1) Your mortgage must currently be insured by FHA
(2) You must be current on your mortgage
(3) You must have closed your FHA mortgage PRIOR TO June 2009
(4) You must have a 640 credit score or higher
Aren’t quite sure about #’s one and three? Call me, and I can help you quickly answer those questions!
How Do I Apply For the New FHA Refinance?
Getting approved for the new FHA streamline refinance is a simple process. I am more than happy to help you gather the items that you need and present you with a complimentary FHA streamline savings analysis.
I have put together a detailed list of the items that you will need, along with the step-by-step process required to lock in a new, low rate under the New FHA refinance program. Download the New FHA Streamline Checklist.
What If My FHA Mortgage Closed After June, 2009?
Unfortunately you are not eligible for the new FHA refinance, but you are still eligible to refinance into a lower rate without an appraisal, but you will be subject to the 2012 Washington State FHA Mortgage Insurance Premiums.
In most cases, you will still save money as Washington State 30-year fixed mortgage rates continue to remain at historic lows.
I always value the opportunity to serve my readers, so please do not hesitate to contact me directly at (425) 350-7136 for more information on getting approved for a Washington State FHA Streamline Refinance.
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