FHA Streamline Refinance..advice

[tpayne105]

Hello again all....as always I enjoy reading everyone's comments...

I closed on my house on February 29, 2008.  I have an FHA loan with Wells Fargo with an interest rate of 6.75%.  I THINK I understand the process of the streamlined refinance but my question is simply.....

Will I come out ahead with lower payments, etc if I go through with it?  I understand there are no credit checks, etc with this type of refinancing.  I plan to stay in my home for quite a long time so that is not an issue......

Of all of you that have done the FHA streamlined refinance, have you come out ahead?  And on average by how much?  What are the pros/cons of doing this?  Did you have to pay any out of your pocket? 

All advice is very much appreciated......it would be great to save some money and at the new interest rates, especially a good thing.

Thank you very much in advance for your help!

Todd

[Anonymous]

It is my understanding, from talking to a loan officer today about it, that you must have a fico of 620 for the FHS streamline refi. No appraisal, no income verification, etc. But you do have a hard pull on your credit. And absolutely no late mortgage pmts for 12 months he told me.

[Anonymous]

the point of the streamline is no credit check/employment verification/appraisal I thought.  The idea is basicly since FHA is already guaranteeing the loan as an FHA loan, as long as you show an ability to pay they are limiting the chances of default by allowing people to refi into better terms.

[Anonymous]

I was told by WFthat I needed 12 months wort h of payment history on the mortage loan in order for them to do a streamline refinance. I ended up going with a mortage broker and refinanced with another lender 4 months after I got the inital home loan.  Someone can correct me if I'm wrong but I think you divide closing costs by how much your saving each month to come up with the break even number of months .  After that it's all money in your pocket.   There's refinance calculators online.  Do a search and you should find several of them.  Good luck. 

Message Edited by SuzieQuzie on 05-27-2009 06:06 PM

[recoverychick]

I just closed on a streamline with no appraisal on Saturday.  I refinanced to 6% last June and went to 4.5%.

It can save you money, but depending on your loan balance, you may have to bring some money to the table.  For no appraisal, the max loan amount is  whichever is less of your original loan amount plus upfront pmi less any pmi refund, or your total debt plus closing costs, prepaids and other stuff.  If you go the the HUD website  and clink the FHA streamline link, there's a PDF of the underwriting criteria, full text.

I made extra principal payments during the year, but still had to bring about 7200 to the table.  It would have been more if I hadn't paid it down.  I started with 1% origination and .5 points, but went to .75 points for a loan extension to close 15 days later and pay only 3 days of double interest.  With FHA, the existing lender gets a full month interest along with the new lender's interest from the beginning date.  It's best for the loan to fund as close to last day of the month as possible.

It's good in the long run.  Just know that it costs.  I think it's worth it.  Also, your new loan balance isn't so high on your credit report.  You have a hard inquiry.

Hope that helps.  Good luck.

[Anonymous]

We closed on our house in August at 6.5% FHA and streamlined intoa 5% in February. Since FHA limits dropped in 2009, we had to pay down our loan to teh new limit, which was only about $2k in our case. We received a credit from our MPI and our escrow towards the new loan. We also had to pay into the new escrow account. Overall, we  brought $2722.87 to the table, after all our credits.

Our payments dropped from $3800 a month to $3000 a month, including escrow. Our new loan balance is about $1,000 more than our original loan balance, which means we lost about six months worth of payments on paper, including extra principle, but our monthy payment and interest rate make up for that.

We looked at bringing more money to the table, since we had it, but it came down to about every $10k we paid, our payment lowered only about $60. Our loan officer drew up several GFEs for us to compare. He presented the GFE in an excel sheet, so I could plug numbers in as well. 

They do a hard pull on your credit to make sure you aren't behind on your mortgage. Credit scores, etc. do not count. You do not need to verify anything else--just sign lots of papers.

[granny031350]

my daughter is in the process right now.  She is going from 7.5 percent to 5 percent.  She is refinancing with B of A home loans (her loan was sold to countrywide within 2 weeks of her closing last Oct 31)  She has to bring 2400 to the table.  No credit check, no appraisal, and she is closing at end of May.  I guess  B of A didn't need to pull her credit because they have her mortgage history right there.  She is very happy with B of A as they have explained everything to her, unlike her previous lender.  She is saving about 125.00 a month.  Not sure if she will get a PMI refund or escrow refund.  I think B of A is applying it (if any) to the costs maybe.

[recoverychick]

That's great that your lender offered the escrow credit.  Mine didn't so I had to escrow the year with the new loan.  I'll get a big chunk from my old mortgage company.  If they had done the of escrow credit/transfer,  I would have had to bring less than 3K. 

Good for you!

[recoverychick]

It's up to the lenders if they want to pull a credit report.  FHA doesn't require it unless there are certain circumstances.  FHA says you can qualify with 620, but the lender may require more or it could be manual underwriting.  My direct lender only did desktop underwriting.  Even for FHA, they didn't look at anything less than 680.  The good thing was they were ready to close in less than 10 days, but it was the timing and the double interest thing for me.

Congratulations to your grand daughter.  Is she sure she's only saving 125 dollars on a 2.5% rate drop?  I don't know what her old and new loan amounts are, but even if I had financed the 15000 in prepaids and closing costs,  I still would have saved about 200. Now I'm close to 300.  She might want to look at her GFE again to be sure she's okay with the deal.

Best to all!

[LindaLu]

I am also with wells fargo and wanting to streamline my fha..unfortunately I did not know about the 12 months on time payments..my husband lost his job and unfortunately don't have 12 on time payments..

so I will call but I guess I already know the answer.

I tried the process for making home affordable and they turned me down saying it was not in the investors best interest..

so therefore I am stuck at 8% interest ..cant streamline .can't do make home affordable interest rate reduction but they will certainly let me paythe higher rate and end up in default because it too high for me now.

sucks