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FHA Streamline Refi, Now or Wait?

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webhopper
Moderator Emeritus

FHA Streamline Refi, Now or Wait?

Hey guys,

 

Wanted your opinions on doing an FHA Streamline refinance. 

 

I'm eligible to do this through my current lender. 

I've never been late on the mortgage.  My current scores are high enough to qualify, they need a 620 and I've got well above that.

 

Here is the deal, I can't roll closing costs into the new mortgage, so these are out of pocket expenses amounting to about 4k

 

I've got 4.3k sitting in an underperforming Roth IRA. I've been informed that I can withdraw these funds at any time, and would probably have to pay a 10% penalty

 

I've got the following credit card obligations:

 

4k/4.2k  Discover Card...  0% for 12 months will pay this off in August

 

4k/22k on NFCU  11%    will pay this off next month

 

900/5k on Amazon Visa.  will pay this off next month

 

Amex  it varies on how much I spent in the month

 

 

The question is, I was planning on doing this refi in Sept...  "points to siggy"

 

Should I wait until September?  Should I do it now and get it over with? 

 

I know I should be patient.. I've been waiting since april for the new streamline rules to go into effect.  

 

 

 

FICO 9:
Filed Chapter 13 on 6/1/2017 after job loss. Discharged 6/1/2022.

Goal: Gardening!


Message 1 of 4
3 REPLIES 3
cim
Established Member

Re: FHA Streamline Refi, Now or Wait?

I'm in a very similar situation to yours. Now that the new rules are in effect, I'd like to jump in now but am saving up a little for the closing costs. Combine that with a little pruning on my credit in order to shore up the best rate possible. The one thing I'm betting on is that rates will either go sideways or down through the end of the year. This weekend I heard a former regional Fed president (now an Econ prof at Princeton) being interviewed on Moneytalk. He speculates that there is a very good possibility for a QE 3 later this year with the goal of pushing down mortgage rates even further. I'm inclined to believe this guy over anyone else at the moment. Given that, I'm going to reasses in September. By the way, I could be wrong but thought I had read that if you're streamlining through your current lender that there should be no closing costs. That might be worth checking into for your situation if you plan on going with your current lender.
Message 2 of 4
webhopper
Moderator Emeritus

Re: FHA Streamline Refi, Now or Wait?

Thanks for the info. I'm inclined to believe that Q3 will be weak for home sales, thus leading feds to push rates lower too. My original plan was for september, so I think ill just stick with that. There are still some upfront fha fees that need to be paid and in my scenario I can't roll them into the existing mortgage.
FICO 9:
Filed Chapter 13 on 6/1/2017 after job loss. Discharged 6/1/2022.

Goal: Gardening!


Message 3 of 4
frugalQ
Valued Contributor

Re: FHA Streamline Refi, Now or Wait?


@webhopper wrote:

Hey guys,

 

Wanted your opinions on doing an FHA Streamline refinance. 

 

I'm eligible to do this through my current lender. 

I've never been late on the mortgage.  My current scores are high enough to qualify, they need a 620 and I've got well above that.

 

Here is the deal, I can't roll closing costs into the new mortgage, so these are out of pocket expenses amounting to about 4k

 

I've got 4.3k sitting in an underperforming Roth IRA. I've been informed that I can withdraw these funds at any time, and would probably have to pay a 10% penalty

 

I've got the following credit card obligations:

 

4k/4.2k  Discover Card...  0% for 12 months will pay this off in August

 

4k/22k on NFCU  11%    will pay this off next month

 

900/5k on Amazon Visa.  will pay this off next month

 

Amex  it varies on how much I spent in the month

 

 

The question is, I was planning on doing this refi in Sept...  "points to siggy"

 

Should I wait until September?  Should I do it now and get it over with? 

 

I know I should be patient.. I've been waiting since april for the new streamline rules to go into effect.  

 

 

 


I have just started the streamline refinance process with my current lender.  We are getting 1.5 points towards closing...at 3.875% rate.  Because of the new rules that went into affect with upfront MI and the reduced MI monthly rate, the 1.5% will reduce my closing costs from $2.4K to ~$600...and my mortage will reduce by $175/month.  I expect to recoup my closing costs in approx 3 months.

 

I would recommend you talk to the LO and discuss which interest rates will give you the most points and still give you a nice reduction in monthly mortgage payment.  If you take $$$ from your IRA, i'm sure you will have to pay income taxes on top of the 10% penalty.  I recommend that you add this cost to the amount you will have to bring to the closing table, divide the total cost by the amount your mortgage will reduce...this will give you the number of months it will take for you to recoup the upfront costs.  Then you can make a determination of whether refinancing makes good financial sense for you right now.  My personal rule of thumb is if it takes me longer than 12 months to recoup my closing costs, then it's not worth it to me. 

 

As long as your DTI is below the maximum required by your lender, I would not worry about the amount of cc debt that's currently showing up on your report.  Your lender should be able to play around with interest rates to see what is best for your situation.

 

Before the new rules went into effect on 6/11, it would not have benefited for me to do the streamline refi (because of the upfrom MI and high MI monthly rate), now it is very beneficial to me.

 

FYI....my mid score is 675.

AmEx Green NPSL | Amex BCP 16K | Citi Simplicity 10k | Discover IT 9K | Chase Slate 7.5K | Amex Hilton HHonors Surpass 7K | Capital One QuickSilver 6K | Home Depot 5k | Chase Freedom 4.5K | LOC 2.5K
Message 4 of 4
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