FHA Streamline Refinancing Obama Announcement
by Shelly from Minnesota
Ask Kate about FHA streamline refinancing Obama announcement regarding a decrease in mortgage insurance premiums: Hi Kate, today March 6, 2012 there was an Obama news conference about being able to save $1000 or more with FHA Streamline Refinancing.
Could you tell me what I could expect to pay for closing costs on this loan at $215,000?
Kate Answers: FHA Streamline Refinancing Obama Announcement - Decrease in Mortgage Insurance Premiums
Although President Obama's announcement referred to the Making Home Affordable HARP, cutting mortgage insurance premiums specifically pertains to FHA streamline refinancing, not an official MHA program.
Furthermore, although cuts to FHA mortgage insurance have been announced, premiums are actually increasing for other borrowers. Welcome to the wonderful world of government insured mortgages!
But don't let this news dampen your enthusiasm. For eligible borrowers, FHA streamline refinances hold the promise of significant savings.
Why is FHA Streamline Refinancing Popular?
FHA streamline mortgage refinancing is popular today because an appraisal is not required, perfect for borrowers with negative equity and underwater home loans.
Depending on individual criteria, some borrowers' loan applications will also be processed under reduced paperwork and relaxed credit score, income verification, and debt-to-income guidelines.
It's worthwhile to note that borrowers must be current on their monthly house payments. They also need to be receiving a tangible benefit, for example, a 5% decrease in mortgage payments or be refinancing out of an adjustable rate mortgage into a stable fixed rate.
Eligibility for Reduced FHA Mortgage Insurance Premiums
Not all homeowners who want to take advantage of FHA streamline refinancing will get the reduced mortgage insurance premiums. As is common among government insured mortgages, there are a few hitches. Hitch 1:
Only homeowners with existing FHA mortgages can streamline refinance into a new FHA mortgage.Hitch 2:
Only homeowners with existing FHA mortgages endorsed
before June 1, 2009 are eligible for reduced mortgage insurance premiums.
Confused over the eligibility date? To take advantage of the reduced FHA mortgage insurance premiums through FHA streamline refinancing, the defining event is endorsed, not closed. The significance? Endorsing can transpire up to a couple of months after closing.
Decreased FHA Mortgage Insurance Premiums
For FHA streamline refinancing, borrowers pay 2 mortgage insurance premiums, upfront and annual. Let's take a look at the astonishing decrease in premiums first.Upfront Mortgage Insurance:
For FHA streamline refinances, effective June 11, 2012, upfront mortgage insurance is reduced 99%, dropping to 0.01% - IF - your current FHA loan was endorsed before June 1, 2009.
In general, upfront mortgage insurance is financed into the loan amount.Annual Mortgage Insurance:
For FHA streamline refinances, effective June 11, 2012, annual mortgage insurance is reduced 50%, dropping to to 0.55% - IF - your current FHA loan was endorsed before June 1, 2009.
In general, annual mortgage insurance is paid monthly.Additional notes:
15 year fixed rate mortgages with loan-to-values under 79% are not charged annual mortgage insurance.
How much is the decrease in mortgage insurance premiums estimated to lower monthly mortgage payments? Approximately $100 per $200,000 financed, subject to market conditions, individual qualifying factors, and FHA exceptions and limitations.
Increased FHA Mortgage Insurance Premiums
For FHA streamline refinancing, borrowers pay 2 mortgage insurance premiums, upfront and annual. Now let's look at increased premiums.Upfront Mortgage Insurance:
For FHA streamline refinances, effective April 9, 2012, upfront mortgage insurance increases from 1.00% to 1.75% - IF - your current FHA loan was endorsed after May 31, 2009.
In general, upfront mortgage insurance is financed into the loan amount. Annual Mortgage Insurance:
For FHA streamline refinances, effective April 9, 2012, FHA annual mortgage insurance ranges between .35% to 1.25%, depending on the size of your down payment and length of the loan term - IF - your current FHA loan was endorsed after May 31, 2009.
In general, annual mortgage insurance is paid monthly. Additional notes:
Loan amounts equal to or greater than $625,500 have an additional 0.25% added to their annual mortgage insurance. 15 year fixed rate mortgages with loan to values under 79% are not charged annual mortgage insurance.
How much is the increase in mortgage insurance premiums estimated to raise monthly mortgage payments? Approximately $25 to $75 per $200,000 financed, subject to market conditions, individual qualifying factors, and FHA exceptions and limitations.
What Are Interest Rates and Mortgage Closing Costs
Mortgage rates and mortgage closing costs for the FHA streamline refinance
are set by individual lenders, just like the new HARP 2.0 loans. So shop for best mortgage rates and closing costs.
At the same time, ask if you will benefit from reduced premiums and if so, by how much. It goes without saying to ask if your mortgage insurance premiums could go up.
For more details go to: How to Reduce Mortgage Refinancing Costs
Breaking News: FHA Mortgage Insurance Reduction
Effective January 26, 2015: HUD announces a reduction in annual mortgage insurance to entice more first time home buyers back into the real estate market.
See how much you can save at Introducing FHA Mortgage Loans.
Alternatives to FHA Streamline Refinancing
What if you aren't eligible for FHA streamline refinancing? More help and information for homeowners struggling with underwater mortgages and negative equity is found at:
Also, be watching the following blue box. Bookmark this page in your favorites so you can be ahead of the curve on upcoming announcements specifically for homeowners who need help getting lower interest rates and decreased monthly house payments.
Good luck and best wishes,
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