On June 11, 2012 HUD reduced the private mortgage insurance requirements for Washington FHA homeowners allowing thousands of Puget Sound residents to now reduce their interest rate while keeping their previous FHA mortgage insurance rate.
You see, if you’ve tried to refinance in the past year or two since rates have dropped, you would have noticed that even though you were lowering your interest rate over a full percentage-point, the monthly savings wasn’t worth the refinance. That is because FHA has raised their monthly PMI (private mortgage insurance premium) nearly three-fold since 2009.[See the video below]
The Washington State FHA Streamline Refinance Program is designed to help homeowners reduce their interest rate, but it’s not designed to help pull cash-out of your equity, consolidate mortgages/debt, or remove co-borrowers from the loan.
Below, I’ve put together a few details explaining the Washington FHA Streamline Refinance, along with a short video and Mortgage Savings Analysis for your review. If you are interested in more information, I am happy to help you gather the right information to confirm your new savings!
Benefits of the New Washington FHA Streamline Refinance
The information below is accurate as of June 16, 2012 and taken directly from HUD/FHA underwriting guidelines. As a direct FHA lender, we honor the following guidelines. Information that you gather elsewhere may not be accurate.
Reduced Monthly Private Mortgage Insurance
If your mortgage loan was “endorsed” by HUD prior to June 1, 2012 then you qualify for a monthly FHA mortgage insurance premium of .55%. In most cases of FHA borrowers that I am refinancing in 2012, their previous FHA PMI premium was either .45% or .55%. This is where the savings comes in – If you were to buy a home today using FHA, your new PMI premium would be 1.25%, nearly three times as expensive.
No Appraisal Required
Under the new FHA Streamline Refinance guidelines, an appraisal is NOT required – regardless of your home value. That means your refinance does not depend on an appraisal showing equity in the home. Please note – when an appraisal is waived, you are not allowed to finance any closing costs into the new loan amount. In most cases today, borrower’s closing costs are getting paid for by the lender. [See a generic example below – (this example is NOT a reflection of what you can attain today nor is it a commitment to lend, it’s a simple example of a past client in our office in September 2012) 3.75%, 30-yr fixed rate with no less than $1500 due at closing] .
No Debt or Income Verification
With the new FHA Streamline Refinance you may be eligible for a “non-credit qualifying” underwrite. Meaning, we do not care about your current debt, collections, or income affecting your “debt-to-income ratio”.
No Minimum Credit Score Requirements
FHA has credit score requirements as low as 580. However, if many banks have “overlays” that require a 640 credit score. As with most loan programs, you may be eligible for much better pricing (rates) the higher your credit rating is.
Rental Homes Qualify For The Washington FHA Streamline Refinance
If you purchased a home prior to June 1, 2009 and then decided to rent your home, you are still eligible to take advantage of this new program. This is a great opportunity to increase your cash flow on your existing rental.
********** IMPORTANT **********
The following information is important to understand before you “count your savings”. I am getting a lot of home owners calling me, saying they read my blog, and that they qualify for the new FHA refinance, just to find out they do not. Here are a few tips I want to share with you –
Just because your loan “CLOSED” before June 1, 2009, doesn’t mean HUD endorsed it before June 1, 2009.
I have seen a few cases where the borrower closed on their mortgage in February or March of 2009, but HUD didn’t actually “endorse” the mortgage until AFTER June 1, 2009, therefore disqualifying the home owner for the new refinance. The only way to find out if your FHA mortgage was endorsed by HUD prior to June 1, 2009 is to have a HUD approved mortgage lender verify your FHA Case number with HUD. If you contact me directly, I will have your results within 30-minutes. [My contact info – Dan Keller (425) 350-7136] .
You Cannot Have Any Mortgage Late Payments in the Last 12 Months
FHA/HUD is going to require that you are current on your mortgage and will need to confirm that you have not missed any mortgage payments in the last 12-months.
Must Pass the “5% Net Tangible Benefit Test
FHA requires the borrower to increase their savings by 5%. In most cases this month, if your interest rate is over 4.5% (30-yr fixed), you clearly pass the net-tangible benefit test. If you would like to reduce your term from a 30 to a 15 year, without an appraisal, then you will have to pass the net tangible benefit test, which may be difficult.
I value the opportunity to serve my readers! Please email me directly at firstname.lastname@example.org or call me at (425) 350-7136 if you have any questions or if you would like to see if you qualify for this program. In most cases, I can have your results to you and a rate quote within 1-hour.
Below you will find an example of my refinance saving analysis for FHA Home Owners.
How Much Will I Save With the New 2012 FHA Refinance?
This is an actual example of a Savings Analysis for a Seattle home owner that just applied for the new 2012 FHA Streamline Refinance. As you will see, this borrower will be saving over $300/month and almost $19,000 over the next 5 years! (click image to see full report – this is an example only and not designed to guarantee you a rate, payment or savings)
I love serving my Puget Sound readers! If you found this information valuable, please click the “LIKE” button below to your left. I appreciate knowing I am helping my readers! And like I said above, please do not hesitate to contact me directly for more information.
I can be reached at (425) 350-7136 or via email at email@example.com