Can someone explain how the FHA Streamline refinance works. I received an offer but I'm just not sure about it. Will I have to get mortgage insurance again. The offer says no credit check no closing cost. This is through PHH Mortgage. The rate is 3.5%
FHA SL is a non-income qualifying refinance where no appraisal is needed. As long as it's an FHA loan it will always have mortgage insurance- it's either 11 years or 30 years. FHA may require you to bring money to the table as one of the guidelines from FHA state that nothing can be added to your loan with the exception of interest + 1-2 months of mortgage insurance so any closing costs and money needed to set up your new escrow account cannot be rolled into your loan. Either you take an interest rate that is higher to get lender credit that will offset these amounts or you come up with the amount.
If you have decent equity and scores are generally above 680 then you want to refinance into a conventional loan to rid yourself of mortgage insurance. Fannie/Freddie doesn't charge you to do a loan whereas FHA charges 1.75% of your total loan amount (may give back a refund if you've had your FHA loan a shorter time- shorter time = larger refund).
Hope this helps
Thanks for the information. I'm a little confused about the mortgage insurance. We currently have an FHA loan but they are charging for the mortgage insurance as we've been in the home at least 12 years now. My scores aren't the greatest as I was unemployed for a couple years and had to use savings for the basics so my credit took a dip. Im still working at improving my scores. I'll just wait until my scores are within the "conventional "Refi range and see if I can get a good rate.
You shouldn't have mortgage insurance then if you've been in the loan for 12 years (unless you refinanced after you purchased). FHA changed their guidelines in 2013. If you put less than 10% down on the purchase the MI would be there for the life of the loan (after 2013). If you call your lender and ask for the MI to be removed based on the value of the home (They can use an AVM for that) they should do that for you (Account also has to be in good standing).