A little over 4 years ago, the advice on this board (and the advice on fixing my credit) allowed me to purchase my first home. With the recent changes (6/11/12) to the the FHA Streamline Refinance rules, I have decided to initiate an FHA Streamline Refinance in order to reduce my interest rate from 5% to 3.75%. I plan on posting as significant events occur to hopefully help others that are thinking of going through this alleged "easy" process. Wouldn't it be wonderful if it actually was as easy as they say! Let the games begin...
06/15/12: I've just provided the initial standard documents to start the application process with a mortgage broker which included driver's license, 2 years of W-2's, last 2 paycheck stubs, last mortgage statement, last HUD-1, last promissary note, 2 months of bank statements.
06/20/12: Broker called a couple of days ago and left a message to call him back. I've left several messages but no response. About ready to go with Quicken Loans because they said they can close in 3 weeks with no closings costs (yeah, right). Maybe I'm being unrealistic about how this process might actually work or the broker I selected is overwhelmed, but the process seems much more labor intensive then Quicken who seems to have an extremely automated and streamlined (no pun intended) process. I'll give my broker a couple more days.......just need to know what next steps are.....
6/21/12: Broker called. I get it now. Everyone and their brother waited to do an FHA Streamline so I need to get in line. Then I find out my credit score needs to be 4 points higher in order to avoid a higher interest rate and additional closing costs (currently 636 - needs to be 640). Oh, the good times continue. So, back to paying down credit cards in order of statement date. Should be easy to raise my score 4 points but also need to save for escrow. ARRGGHH. May be a couple of months.
07/11/12: They will pull your credit score because banks drive what your credit score needs to be to get the better rates/lower closing costs, NOT the FHA. I think the days of sub 620 are over. So, I paid one credit card down by 30% last week one day before the statement date and my credit score jumped to 644. Then I left a message for my broker but he hasn't returned my call yet which makes sense. It's first in, first out and I'm at the bottom (or middle) of the pile right now. Last time I spoke with my broker, he was very straightforward about the fact that several of the big banks won't do FHA Streamline loans for anyone BUT their current mortgage holders. Yeah, right. I'm with Chase and they told me to go pound sand. It makes sense, why would your current bank agree to reduce your interest rate if they know that the other big banks won't do the streamline because you're not their customer? It's all rigged. Well, this big bank racket is what's what's causing the HUGE backlog with mortgage brokers. Right now I don't care that much and am continuing to pay down each credit card by 30% so my credit score will be well over 640 within a couple of weeks, My hope is that once my broker has cleared through the backlog and it's off his desk (and the backlog starts in underwriting) mine should go relatively smoothly. I'll post again as soon as I hear back from my broker. I plan on reminding him I'm still out here after my score jumps again.
07/30/2012: Saga continues. I quickly paid down credit cards to get my score over 640. Done. I called my broker who apparently is too busy to return calls so i wasted a few days waiting for him to call me back. So, I threw the dart at the dart board and just picked an online company (no names). Submitted online request and broker calls me right away and tells me that I can get a great rate, little or no origination fee and no appraisal. Great! I spend all Friday night sending them all my financial information. I get an e-mail the next day that asks me how I'm planning on paying for closing costs. I'm $6,000 short. HUH? So, I moved on to mortgage company B. Submitted request online and the broker calls me fairly well right away and tells me the same story (great rate, no origination fee, no appraisal). Sound familiar?? Well this time the GFE appears to actually back up the words. It's a little higher interest rate (3.625%) but no appraisal, 30 day close (8/31 - I'll believe that when I see it), and I'm actually am getting a credit towards some of the closing costs. I've sent all of my documents and am currently waiting around 7 days (sure) for the FHA to respond to some standard verification of eligibility.
A few learning's from the last few days that may help the someone who really is confused by the whole process (like me). You can't roll the closing costs into an FHA Streamline Refinance loan unless you get an appraisal IF you owe more on the loan now then you did when you first bought the house - like me. I've refinanced once already since 2008 so my original loan amount was about $3,000 LESS than my current loan amount. I'm also underwater so I will have to pay some of the closing costs. If you're in a similar situation, don't believe that "no closing costs" mean you won't have to bring money to closing (think funding of your escrow). You should be able to get a deal where you get most of it back by skipping a mortgage payment and getting your escrow money back from your old bank. The amount listed in the initial GFE may vary A LOT to what you will actually need to bring to closing. Since they don't have your escrow information and put in a ballpark figure, you'll want to actually calculate it yourself so there isn't any surprises. In my case, the escrow funding is WAAAYY lower on the GFE then it will actually be at closing because my semiannual property tax payment will be due out of my escrow on October 1 (add $1,050 to my closing costs). Now add some other basic closing costs such as title insurance, prepaid interest, government fees, etc. And it adds up quickly. I figure I'll need to bring about $3,000 to closing and will get back about $2,500. However, since I"m going to be saving around $160 per month for 30 years it seems well worth it. Lastly, don't forget when you get your GFE, and you see the bottom line, don't panic until you take a look at the FHA upfront insurance premium which may not be accurate until they verify that you're eligible for the reduced 0.1% up front premium. For example, my GFE says $3,065 for MIP. Actual will be about $175. That's all for now. Will keep posting as things progress.
08/08/12: Great news! I had submitted an application to mortgage company B (see above) on 7/27 p.m. while I was hassling with the other lender who tried to come back with better numbers but couldn't beat mortage lender B. I just heard back yesterday that my loan has approved and is being sent for final underwriting approval (loan has been approved yesterday a.m. but I needed a couple of minor pieces of info that I sent last night). It's unbelievable how quick this process went with mortgage lender B. I can close in a few days if I want. I chose to close on 8/22 to give enough time so that my interest rate lock doesn't expire before funding and so that I pay the least amount of double interest as possible. Locked in at 3.625% and I received a 0.5% credit against closing costs. I should receive my HUD-1 Settlement Statement today or tomorrow so that I get an idea on final closing costs. So far, a unexpected quick, painless and straightforward process. I'm going to make sure my contact at mortgage lender B is ok with me posting his contact information before I do so but it's been like a dream to work with him and his team. Will post again after close (unless something else comes up in the meantime). Finding the right lender/broker is the key to everything.
08/19/12: Scheduled to close 8/22/12 at my house which is really convenient. One issue that cropped up last Friday is when I received a copy (per my request) of the loan paperwork that I'll be signing at closing, I notice my name is not legally correct on the paperwork (using a shortened version of my name). I noticed that it's also incorrect on the Deed too so I've asked if the title company and include a Quitclaim Deed to change it. Yes I'll be transferring title from me to me. I'll probably have to pay an additional filing fee (gladly to get it fixed) but won't have to pay the Deed transfer taxes. I sure hope it doesn't delay my closing date. If it does, I may just deal with it on my own later.
08/24/12 (Latest Update): So a very nice notary came to my house on Wed (8/22) for signing of paperwork as planned. Took about 30 minutes. Incidently, I had the title company fix the name issue (Grant Deed-Quit Claim Deed) so I paid an additional $56 to get it fixed (mostly filing fees) - well worth the peace of mind and to not have to deal with it a some later date. I'll still have to let the original title company know about the change for the title insurance. Loan should fund on 8/27 so once that hurdle is reach, I will be completely done. Saving about $200 per month on my payment with the lower interest rate and pretty much took 3 weeks from start to finish. I'll post one last time when the loan funds to close out my story.
Starting Score: EQ 679, TU 697
