On June 11, 2012 HUD reduced the private mortgage insurance requirements for Washington FHA home owners allowing thousands of home owners to now reduce their interest rate while keeping their previous FHA mortgage insurance rate.
You see, if you purchased a home prior to June of 2009, and tried to refinance lately, you would have noticed that even though you were lowering your interest rate over a percentage point, the monthly savings wasn’t wasn’t worth the refinance. That is because FHA has raised their monthly PMI (private mortgage insurance premium) three-fold since 2009. [See the video below]
The Washington State FHA Streamline Refinance Program is designed to help home owners reduced their interest rate, but it’s not designed to help pull “cash-out” of your equity, consolidate mortgages, 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. As a direct FHA lender, we honor the following guidelines.
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%. 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 waive, 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 the example below – 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
As a direct FHA mortgage bank, we can approve credit scores as low as 580. However, if your credit score is over 640, you are eligible for much better pricing (rates).
RENTAL HOMES QUALIFY FOR THE WASHINGTON FHA STREAMLINE REFINANCE
If you decided to rent our your home after securing a FHA loan, you are eligible to take advantage of this new program too! This is a great opportunity to increase your cash flow on your existing rental if you currently have a FHA mortgage that you attained prior to June 1, 2009.
********** IMPORTANT **********
The following information in 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.
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 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 see an improvement in 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.
See if Your Qualify for the FHA Refinance – FREE Savings Quote
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 would like to see if you qualify. 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)
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