New FHA Streamline Refinance Guidelines

New FHA Streamline Refinance Rules

St Paul, MN:  Home owners with an existing FHA mortgage loan – rejoice. Washington has announced new guidelines to make it cheaper and easier for homeowners to refinance FHA mortgages. The reason is pretty simple – since FHA already backs your mortgage, they’re the ones who are on the hook if you default. So if refinancing will help make your mortgage more affordable for you, it makes sense for them to help.

The updated guidelines apply to FHA Streamlined refinancing, which is about as close to automatic loan approval as any refinance program can get. There are many variables to the program, but under the best circumstances, you don’t even need an appraisal, making it a great loan for underwater home owners.

Reduced FHA Fees

The changes announced dramatically reduce some of the fees usually charged for FHA mortgages and refinancing. FHA loans have two major mortgage insurance parts. The upfront fee, and the monthly mortgage insurance. For refinances starting June 11th 2012 and after, the current upfront fee of 1 percent of the loan amount is being reduced to a mere 0.01% – equal to $10 on a $100,000 mortgage – while the annual insurance premium is being cut by more than half, to 0.55 percent of the balance, down from 1.15 percent currently.

The administration estimates the reduced annual fee will save an additional $95 a month on a $175,000 mortgage, on top of the actual savings from refinancing to a lower mortgage rate.

Anyone can with an FHA mortgage can refinance at anytime, but to qualify for the reduce fees, you must have obtained your current FHA mortgage prior to June 1, 2009.

Home Lost Value?

The FHA streamline refinance option that does NOT require an appraisal is a great option for homes that have lost value. Homeowners can be underwater on their FHA mortgage (i.e., owing more than their home is worth) and still qualify for refinancing. In fact, there’s no limit on how far underwater a borrower can be and still get an FHA Streamline Refinance.

If you’re underwater, but have a second mortgage or HELOC (home equity line of credit)  – you’ll have additional challenges – so be sure to speak with a good licensed loan officer to determined your exact situation.

Bottom Line

FHA does not do loans. Lenders do loans that FHA insures. Although FHA has pretty generous guidelines for refinancing, it’s still the lender’s call on whether to refinance or not. Some lenders will have tighter guidelines, and some may even refuse to refinance a mortgage even if it appears to meet FHA requirements. The new guidelines remove some of the obstacles that sometimes make lenders reluctant to do an FHA streamline refinance, by taking such loans out of the formula used to assess their performance as FHA approved lenders. Since many of these mortgages are considered somewhat riskier than more recent home loans, some lenders have been reluctant to refinance them for fear of damaging their rating with FHA.

To see if you can obtain an FHA mortgage refinance, check with your local approved FHA mortgage lender.



HARP 2 refinance program in MN and WI

HARP 2.0 refinance program details in MN and WI.

St Paul, MN: The much anticipated revised HARP Refinance Program (HARP 2) is now in effect, making it much easier for underwater home owner to refinance their mortgage into today’s low mortgage rates.

The two biggest guideline changes to the HARP 2 program include the POSSIBILITY of unlimited Loan-to-Value and the POSSIBILITY to refinance even if you have Private Mortgage Insurance (PMI). This opens up financing opportunities for seriously upside home owners who have kept up with their current mortgage obligations.

There is a LOT of misinformation out there... The reality is NO LENDER ANYWHERE can promise you a HARP 2 refinance approval WITHOUT having a full application and submitting that application through either Fannie Mae or Freddie Macs automated underwriting computers (AUS).


Who owns my mortgage loan?

Who owns my loan?

Minneapolis, MN: Until recently, no one really needed to know, and no one really cared who ultimately owns their mortgage loan. Home owners receive their monthly statements, and make their monthly payments, to their mortgage company (or mortgage servicer).

With numerous program available to assist homeowners, including HARP 2, the Home Affordable Refinance Program, which require the loan be owned by Fannie Mae or Freddie Mac, it is very important to know who, and if they own your mortgage loan.

There are usually a few people involved in your loan process:

  • The Originator: The company who did the original loan. This could be a bank, broker, or direct mortgage company
  • The Servicer: The company now providing the statements and accepting the payments is only providing the service of billing, statements, customer service, etc. This company could also have been your originator.
  • The Investor:  This is usually not the company that provided the funds originally to make the loan, but a company that may hold your loan permanently, or sell it off to someone else, like Fannie Mae and Freddie Mac. Many times this company also becomes your loan servicer.
  • Actual Owner / End Owner: This could be a bank, mortgage company, or some kind of investor group. For a large number of homeowners, this is Fannie Mae or Freddie Mac.
Who owns my mortgage loan? – Click to find out

 Click here for a HARP 2.0 Lender in MN and WI


The YourGage? Pick any mortgage amortization loan term you like

Who said you have to pick a standard mortgage loan term?

Design your own mortgage loan. Pick any term loan amortization period you want – from 6 to 30 years.

A big internet lender likes to call this “The YOURgage“, and claims it is “only available from them!”  They go as far as to make it sound like they “invented” it. Well, that is far from the truth. Actually, it is a little know loan option available from a large number of MN mortgage lenders.

Mostly used for refinancing, but it can also be used to purchase a home.  Let’s say you have a 30-year mortgage with just 18-years left. You’d probably like to refinance to today’s super low mortgage rates, but you don’t want to go backwards to a new 30-year loan, or even a 20-year loan.

So how does it work? Simple. Just tell us how many years you want for your home mortgage, and that is what you get!

Does it cost more?  What are the interest rates? No, it doesn’t cost more. Rates are calculated based on the closest standard fixed rate term. For example, if you want an 11-year mortgage loan, you get the standard 15-year interest rate. On the 18-year loan, your interest rate will be the same as a 20-year loan.  If you wanted a 22-year loan, you get the same interest rate as a 30-year loan.

Other than that, it is simply a standard home mortgage loan.

Use this online mortgage calculator to determine what YOUR mortgage payments ( YourGage ) would be, then APPLY with a local MN based direct lender.


What day of the month is best to schedule a home closing?

I just read this on a site primarily for Real Estate Agent:

For the first time home buyer who is low on Cash, I would highly recommend closing at the end of the month.”

WOW…   As a licensed mortgage professional, I completely disagree with this statement from Real Estate Agents!” The days of interest scare, and false illusion of some serious savings has caused many problems for many people over the years.

My advice: CLOSE WHEN IT IS CONVENIENT – Not simply at the end of the month.

On any mortgage loan closing, you start paying interest the day you sign. Many people tell you to close the end of the month because you will save a lot of month in closing costs by doing so. This is misguided advice.

You are NOT paying “additional” closing costs – you are simply paying interest starting the day you purchase the home. Close whatever day makes most sense for YOU!

Let us take a $200,000 loan, 30-year fixed, at 4.00%

  • If you close March 30th, your first payment is 32 days away (May 1). You pay two days of interest at closing ($44.00)
  • If you close April 2nd, your first payment is 58 days away (June 1). Sounds great, but you will pay an additional 28 days of interest at closing ($622.22)

Appears to be some significant savings – but lets do more math. With either closing date, your mortgage (loan only) payment is $954.83.  So if we assume the 60-day window of the “closing month” and when the first payment is due using either method, and calculate what each person will have needed to pay out-of-pocket including their June 1st payment, we get:

  • Option 1:  Pays $44 for two days of interest plus two mortgage payments  = $1953.66
  • Option 2: Pays $622.22 at closing, plus one mortgage payment = $1577.05

Completely opposite of what the Realtor said, you actually just saved $376.61 by closing on the 2nd day of the new month, versus the last day of the last month.

Another aspect – The last week of every month, is extremely busy for both the Closing Agent and your mortgage lender. There is a larger possibility that an error may be made during this time. You may also find the Closing Agent much more relaxed and personable if she doesn’t have 8 other closings scheduled the same day as yours. Anytime between the 4th and 24th of the month are good days to close.

Moving considerations: Let us say you expect to closing on your new home and move out of your current residence the last day of the month. You give notice to your landlord to end your lease and arrange for movers or to rent a truck. Then, your loan closing gets delayed for 5-days. This happens ALL THE TIME, especially with foreclosures and short-sales. You are now homeless! New tenants could be moving into your apartment, and the movers are going to charge you for wasting their time. You could be forced to live in a motel for a couple of days!

A Better Plan: allow for a 5-7 day overlap between closing and moving. In the long run, it is not nearly as expensive and it will sure give you peace of mind.

Moving trucks/movers: Go price out moving trucks. They are significantly cheaper if renting in the middle of the month versus when everyone else is moving at the end of the month.  The “cash strapped” buyer could have easily spent the difference in the cost of a moving truck.

TIPS FOR A SMOOTH HOME LOAN CLOSING – by a guy who has been to thousands.