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FHA Streamline Mortgage Amount Calculation

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ShanetheMortgageMan
Super Contributor

FHA Streamline Mortgage Amount Calculation

Since rates have come down a lot I've been getting asked a very similar question over and over again, and that is how do you calculate the new loan amount on FHA streamline refinances.  You can do an FHA streamline refinance with or without an appraisal, and the loan amount is calculated slightly different in either situation.  A lot of people who just obtained their FHA mortgage might not have enough equity to refinance without any out of pocket costs, in this situation ask your lender if you can get a higher rate in trade for the lender paying a portion/all of the closing costs (ie. instead of 5% with $2-3k out of pocket take 5.5% with $1k or no money out of pocket, etc.)

 

Refinance (Streamline without an appraisal) – the lower of:

• Original principal balance (from the Refinance Authorization screen in the FHA Connection), or

• Principal bal on existing first lien + up to one month monthly MIP + the Mtg pmt. (PITI) that was due on the 1st (if not already paid) + up to 30 days interest for the current month + late charges + escrow shortages, minus MIP refund (if applicable), + borrower-paid closing costs + prepaid expenses (per diem interest to end of month on new loan + hazard ins deposits + real estate tax deposits + reasonable discount pts)

• May not receive cash back in excess of $500.00. 

 

Refinance (Streamline with an appraisal) – the lower of:

• The LTV limitation used for purchases, or

• Principal balance on existing 1st lien + up to one month monthly MIP + the Mtg Pmt (PITI) that was due on the 1st (if not already paid) + up to 30 days interest for the current month + late charges + escrow shortages, minus MIP refund (if applicable) + borrower-paid closing costs, + prepaid expenses (per diem interest to end of month on new loan + hazard ins deposits + real estate tax deposits + reasonable discount pts.)

• May not receive cash back in excess of $500.00

 

You might be wondering "MIP refund"?  Yes, on FHA mortgages being refinanced into a new FHA mortgage you may be entitled to a refund of the upfront MIP you paid on the FHA loan being paid off if you get your new FHA mortgage within a 3 year period.  The refund is anywhere from 80% down to 10%, depending on how close you are to the end of the 3 year period (the closer you are to the end, the lower the refund amount is, decreases by 2% each month).

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