FHA Streamlined Refinancing Will Lower Mortgage Payments
Posted on April 13, 2009 in the Mortgages category
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There are enough reasons why you must refinance your mortgage loan. For one, times are tough these days and all of us cant afford high payments, whether it is mortgage or any other bill. If there is a chance that one can lower expenses, such as mortgage payments, why not take it? It will do you and your family a lot of good. That is why FHA streamline refinancing is very good.
For those who are unfamiliar with the terminologies of the housing market, FHA streamline refinancing allows a homeowner to reduce the interest rate on their current home loan. This streamlined refinancing can be done quickly and doesnt require any appraisal at all. Opting for this kind of refinance method will spare you with the tons of paperwork needed by your lender”speeding up the process, which saves you time and money.
How do you qualify for an FHA Streamlined Refinancing? Heres what you need to know:
1. Your mortgage must be already insured by the FHA 2. You must have a current mortgage and not delinquent 3. The refinance is to result in a lowering of the borrower’s monthly principal and interest payments 4. No cash may be taken out on mortgages refinanced using the streamline refinance process
There are different streamlined refinancing types your lenders can offer. No-cost refinances will not require you to take money out of your pockets, but it will charge you with a higher interest rate. Closing costs are shouldered by the lender.
Sometimes, the lenders can carry over closing costs to the new mortgage amount. Note that this can only be done if there is enough equity in the property which is determined by an appraisal. For refinances without appraisals, the new loan amount must not go beyond the new loan amount.
For homeowners who dont have an FHA loan and want to qualify for the streamlined refinancing, the way to go about this challenge is to apply for an FHA refinancing loan or a conventional refinancing.
Holders of a conventional loan who want to refinance with FHA must apply with credit check, employment verification, and debt-to-income ratio requirements.
FHA Streamlined Refinancing is one of the effective ways you can keep your homes. During these times when foreclosures happen in almost every neighborhood, it is extremely important that you can afford monthly mortgage payments to stay in your homes. Utah is no exception. The foreclosure crisis has already crept up to different states. Lowering mortgage payments through FHA Streamlined Refinancing will help curb foreclosure in communities and the whole state.
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Last week the press reported that Fannie Mae had changed its underwriting guidelines for condos. We first reported the problem a two weeks ago as it related to a deal we were working at The Vale Lofts in Tempe. Fannie Mae used to underwrite conventional loans in condo communities if 51% of the condos were either already sold or under contract with legitimate buyers. The new rules increases that percentage to 70%. So think about it. You are a major investor who is considering buying the bank note on a high rise condo building that is in trouble. You figured that you would have to offer seller financing to prospective buyers until you reached the 51% mark. Then, in one fell swoop Fannie Mae changes it to 70%. So in a building like Century Plaza the developer might have to finance an additional 30 condos before any buyer could get regular financing. I would imagine big investors have a trick up their sleeves but I don’t know what it might be.
Another whammy is that any buyer, regardless of how good their credit score, will have to pay a .75% premium when buying a condo in a high rise building. This won’t be a deal breaker for a lot of people but it might persuade some to buy elsewhere.
Yet another challenge? Fannie Mae has also stated that it will no longer do loans in condominium communities where 15% or more of the homeowners are behind in their HOA fees. As we stated in our aforementioned blog post this will be a bigger and bigger issue in condo communities. This particular rule won’t affect buildings like Century Plaza or Safari Drive or one of the other failing buildings because the new owners will bring a large influx of cash to properly “fund” the HOA but it will adversely affect the communities where the developer has already moved on and the HOA is in financial trouble because of foreclosures (e.g. Landmark on Central, The Vale, and others).
So, although we are hopeful that the pending failures of several local buildings will bring much lower prices, renewed buyer interest and potential market recovery we are very concerned that Fannie Mae’s new guidelines might unravel everything.
Great article Greg!