The Obama administration has taken a bold step toward improving the overall housing situation for homeowners and future homebuyers. It was announced that the annual mortgage payment premiums charged to homeowners of government-backed loans would be reduced significantly.
With the new change the insurance premiums assessed by the Federal Housing Administration will be reduced from a factor rate of 1.35 percent down to .85 percent. This means that for every $100,000 you would save $500 a year.
For future homeowners, this is a significant opportunity to expand their qualified purchase price going forward. The mortgage insurance premium is included as part of the debt to income ratio and a lower amount means you will be able to apply more of that money to your mortgage payment, which means a higher loan amount and purchase price. It is believed that this change could help thousands of homeowners enter the housing market.
For current homeowners there is a significant opportunity to lower their current mortgage payments. Current homeowners who are paying a rate higher than the new reduced rate can refinance into the new lower insurance premium rate. The only way to take advantage of this reduced mortgage insurance premium is to refinance into a new lower insurance rate.
In order to assist current homeowners with this process, Broadview Mortgage offers a simple program known as an FHA Streamline Refinance. The process is much simpler than a traditional refinance. Some of the benefits of the streamline program are:
• No Income Verification required
• No appraisal required
• Much less documentation required
FHA guidelines require that there be a minimum net tangible benefit of 5% for the applicant. If there is not a 5% net tangible benefit then the lender is not allowed to proceed with the refinance due to FHA Guidelines.
The process of understanding the benefit to the client is a simple process of comparing your current principal and interest payment, mortgage insurance premium, and property tax and hazard insurance payment to the new rate and payment. After an apples to apples comparison, if there is a 5% benefit then the applicant is clear to proceed with the application.
The application process is much easier than with a traditional refinance. The standard documentation needed for all applicants are as follows:
• A recent mortgage statement
• Hazard insurance declaration page
• 12-Month mortgage transaction history
• Verification of escrow account funds
• A clear copy of a Driver’s License and Social Security Card
The entire process only takes about 20 days and there is no out-of-pocket expense to the borrower. Standard expenses for a refinance such as title and escrow are still part of the process, but Broadview Mortgage will cover those expenses. The applicant need only continue to make their current mortgage payment throughout the streamline process.
In some instances the borrower will need to help contribute funds to establishing their new escrow account for property taxes and insurance on the new loan. Borrowers who have a challenge with the escrow deposit funds may even be offered an advance of the funds for their escrow account. Once the applicant receives the refund from their current servicer, they need only repay the advanced funds to Broadview Mortgage. Each case is unique and will be determined after review by a Broadview Mortgage Loan Professional.
Current homeowners with the opportunity to take advantage of this reduction in insurance premiums should treat it like the reduction in gas prices and take full advantage while they have the opportunity. In the last decade the mortgage insurance premiums steadily increased and now that they have been reduced there is no guarantee they won’t be increased at someone point again in the future.
If you have 20 percent equity in your home and you can qualify for a conventional mortgage that may be the best solution for you, but if not this is a great opportunity in the interim. This program will allow you to make the best out of a bad situation. No one wants to pay mortgage insurance premiums, but if you don’t qualify for a conventional mortgage, this will be the best opportunity you have to reduce your current mortgage expenses.
Broadview Mortgage has also been offering some of the lowest rates available in the market for this program. If you would like a free consultation with Licensed Streamline Specialist you can call them directly at (888) 300-9581 or learn more at www.letsstreamline.com. You can call be tween the hours of 6:00 a.m. to 9 p.m. PST and make sure you have a copy of your most recent mortgage statement available so they can provide you with savings tailored to your circumstances.