An FHA Streamline Refinance is incredibly easy to do.
With nothing more than your mortgage statement and homeowners insurance paperwork in hand, you can drop the interest rate on your current FHA home mortgage to today’s historically low rates.
There is a catch though – You have to have at least a 5% reduction in payment to qualify for an FHA Streamline Refinance.
The challenge this presents is that while interest rates continue to plummet, mortgage insurance premiums have increased for FHA insured mortgages.
This leaves some homeowners in quite a bind – you have the opportunity to reduce your interest rate by a full 1% but your payment stays the same or is only reduced by a small amount because the new mortgage insurance fee is much higher than what you have now.
If your FHA loan was closed on or before May 31st, 2009, a new FHA program has been created to allow you to streamline refinance your loan without having to pay increased costs of mortgage insurance.
Today’s mortgage insurance premiums are 1.25% monthly and 1.75% upfront. If your loan was closed in 2009, your current monthly mortgage insurance is only .55% and your upfront was 1.00%.
Reduced Mortgage Insurance Rates
Monthly MIP: .55%
Upfront MIP: .10%
If your loan falls into this timeline, closed on or before May 31st, 2009, you will be allowed to do a Streamline Refinance under this new program after June 11th, 2012.
Consider your Options Before Refinancing
One of the reasons you will see a drop in your payments is that you are going from a 27 year loan back into a 30 year loan. This can be a little disheartening.
If you’ve ever looked at your mortgage statement closely, you’ve noticed that most of your payment goes to pay interest and little goes to pay down the loan balance.
If “going backwards” on paying your home loan down is something that really concerns you, one fantastic option to combat this is to continue making your same payments after lower the interest rate.
If you would like to see how much faster that will pay off your home, shoot me an email at [Broadview]S@Broadviewmortgage.com or give us a call. It’s always comes down to running the numbers.
It either makes financial sense or it doesn’t.