This weeks featured program is the FHA Streamline Refinance. I really wanted to give you a good understanding of this program due to all the FHA loan we have been doing in the past 2-3 years. With lower market rates, the benefit of saving money with a refinance has been more appealing. The program requirements are very basic (streamlined):
– Current loan has to be FHA loan and in existence for 12 months.
– Credit score of borrowers 620+
– Have a job (Income will not be disclosed to bank)
– No appraisal will be done, so equity in is not required
– No fixed cost to the borrower, the bank will pay for costs (only 1st payment to be brought in to escrow)
As an example to clarify how the program works. I had a client that purchased the house in Norwalk with an FHA loan of $255290 December 2009, $1875 piti 5.5%, 30 year loan. We did a Streamline refinance on August 2010 with loan of $ 257000 , $1707piti 4.875% rate . The borrower saved $168 a month without spending money. In reality the borrower had to bring in one payment to close the loan but when the old loan was closed she got a refund of $2900 from her impound account so at the end of the day she ended up with $1300 cash in her pocket and $168/ monthly savings.
The house value had gone down in value since the purchase and her husbands income has gone down considerably. But because of the programs No Appraisal requirement and No income verification these were no issues. There loan balance only went up by $1700 because of all the costs were paid by the bank.
Currently the rates on FHA Streamline are ranging from 4.5- 4.625% with all fixed costs paid by lender. Savings will be higher or lower depending on balance of the existing loan and from my past experience if you can lower the rate by .5% it is worth doing the refinance. So go through your old clients and see if you can help them save money!!!!! Call me let me help
Tigran Momdjian (Direct lender/ loan broker)
American Capital Corp.
10058 Rosecrans Ave.
Bellflower, CA 90706
Actual programs are subject to change without notice and may change due to market conditions, program offerings, product requirements, required qualifications, and other criteria. American Capital Corporation is a licensed real estate broker with the California Department of Real Estate, Broker License #01174694