BIG FHA Streamline Refi news (for FHA loans prior to June 1, 2009).

I am in Texas, where everything is bigger. This apparently includes closing costs!

He has not sent me actual numbers. During our initial discussion he estimated 3.25% with $3,500 in closing costs. At the time, he thought that I would be paying a little less than $2,100 for up-front MIP. When I told him how long I had the FHA loan (since 2003), he confirmed that the up-front MIP would be almost nothing ($12). I assumed that this would reduce the closing costs to around $1,400 ($3,500 - $2,100 = $1,400).

He sent a message to me today indicating that the closing costs will probably be "about 1% origination, $550 processing, and the title company cost will be about $1200 because of title policy." 1% origination is roughly $1,170, plus $550 and $1,200 is already $2,920.

These amounts are in line with what Wells Fargo told me. I will post an update when he gives me all the figures.

Thanks again.

Quote from rcm1 : I am in Texas, where everything is bigger. This apparently includes closing costs! He has not sent me actual numbers. During our initial discussion he estimated 3.25% with $3,500 in closing costs. At the time, he thought that I would be paying a little less than $2,100 for up-front MIP. When I told him how long I had the FHA loan (since 2003), he confirmed that the up-front MIP would be almost nothing ($12). I assumed that this would reduce the closing costs to around $1,400 ($3,500 - $2,100 = $1,400). He sent a message to me today indicating that the closing costs will probably be "about 1% origination, $550 processing, and the title company cost will be about $1200 because of title policy." 1% origination is roughly $1,170, plus $550 and $1,200 is already $2,920. These amounts are in line with what Wells Fargo told me. I will post an update when he gives me all the figures. Thanks again.

There are States where costs are customarily higher. For example, New York, Florida, Virginia all have State taxes/fees which others do not. Depending on the loan size a slightly higher rate can be utilized that would provide a higher lender credit to cover all closing costs.

As your current loan was endorsed prior to June 2009 you do qualify for the reduced MI which increases the savings. Again, do not get hung up on the 3.25% rate and ask to see the lender credits for 3.25%, 3.375%, and 3.50%; then weigh the options. You should be able to structure the loan where the lender credit covers all closing costs (and maybe all the escrows too if desired).

I am admittedly biased, but a qualified mortgage broker with the right wholesale conduits can deliver much better loan terms on a FHA Streamline than any of the big banks (and in half the time).

-Adam
Old Hippy & Mortgage Pro

Quote from rcm1 : I am in Texas, where everything is bigger. This apparently includes closing costs! He has not sent me actual numbers. During our initial discussion he estimated 3.25% with $3,500 in closing costs. At the time, he thought that I would be paying a little less than $2,100 for up-front MIP. When I told him how long I had the FHA loan (since 2003), he confirmed that the up-front MIP would be almost nothing ($12). I assumed that this would reduce the closing costs to around $1,400 ($3,500 - $2,100 = $1,400). He sent a message to me today indicating that the closing costs will probably be "about 1% origination, $550 processing, and the title company cost will be about $1200 because of title policy." 1% origination is roughly $1,170, plus $550 and $1,200 is already $2,920. These amounts are in line with what Wells Fargo told me. I will post an update when he gives me all the figures. Thanks again.

~$2900 for all closing costs is the exact same numbers that I recieved on my loan for a $112k loan in California. If I were you I would go with a slightly higher rate to cover most of your closing costs.

Quote from jordanz12 : ~$2900 for all closing costs is the exact same numbers that I recieved on my loan for a $112k loan in California. If I were you I would go with a slightly higher rate to cover most of your closing costs.

~2900 in Closing costs, or closing costs and escrows?

I am not here to self promote so please do not misconstrue this post. I process California FHA Streamlines regularly and the actual closing costs for a 163k FHA Streamline Refi I closed this week was $1514 (exact figures). If that $2900 includes the establishment of new escrows then that may make sense; otherwise it is almost twice what it should be.

Again, you need to compare the costs, then the rate and the associated lender credit. All three of those components are needed to know you are getting the best loan. (i.e. low rate is worthless with high costs; and costs need to be compared against the offsetting lender credit to come up with a net figure.)

All I am stressing is that everyone should obtain more than one quote with at least one from an experienced mortgage broker with good wholesale conduits. They can get the refi done very competitively and in half the time.

-Adam
Old Hippy & Mortgage Pro

I do not think this broker is offering anything better than Wells Fargo...He is pushing for an appraisal in an attempt to do a non-streamline FHA or a conventional loan. He had a realtor pull comparables for our neighborhood and he is guessing that an appraisal will put us right at 80% LTV. I think we fall short by a $3-5,000.

He also is really pushing 15 year loans. While I understand that 15 year loans will save the most interest, I do not know that we will be in the house more than 7-10 more years, and the 30 year gives me the flexibility to pay additional towards the loan principal or put the monthly savings in a 401(k), etc.

My loan balance is approximately $117,000. My mid credit score is 811, my better half's is 813.

Over the phone he told me:

1. 15 year FHA Streamline 3.25%, $117,000 loan w/$3,500 for closing costs + $1,200 escrow. Monthly MI?? (Wells Fargo offered $116,811 loan 2.75%, w/$2,500 for closing costs + $2,400 escrow. No monthly MI??)
2. 15 year FHA Streamline 3.50%, $117,000 loan w/no closing costs + $1,200 escrow (I told him I will probably pay the amount of the escrow since I will get my old escrow back from Wells Fargo). Monthly MI?? He later got back to me with the following message: "Base on the loan amount, and the rate we are suppose to charge the borrowers for the lender credit will not be available on your loan." Is he saying that my loan is too small for a lender credit? (Wells Fargo offered $116,811 loan 3.375%, w/$2,700 closing costs/escrow after lender credits. No monthly MI??)
3. 30 year FHA Streamline 3.50%, $117,000 loan w/$3,500 for closing costs + $1,200 escrow. Monthly MI. (Wells Fargo offered $116,811 loan 3.375%, w/$2,650 for closing costs + $2,400 escrow. Monthly MI.)
4. 30 year FHA Streamline 3.75%, $117,000 loan w/no closing costs + $1,200 escrow. Monthly MI. He later said that this was not an option per the comment in item 2 above. (Wells Fargo offered $116,914 loan 4.00%, w/no closing costs and no escrow after lender credits. Monthly MI.)
5. 15 year FHA w/appraisal 3.00%, $120,675 loan w/no closing costs or escrow payment. The appraisal would cost me $450. No monthly MI?? (Wells Fargo offered $122,246 loan 2.75%, w/no closing costs and no escrow after lender credits. $34.17 monthly MI??)
6. 30 year FHA w/appraisal 3.375%, $120,675 loan w/no closing costs or escrow payment. The appraisal would cost me $450. Monthly MI.

One confusing item is the amount needed for escrow at the closing - Wells Fargo calculated $2,400, he is calculating $1,200. It seems like the Wells Fargo loans are better, especially since any "extra" put into the escrow ($2,400 w/Wells Fargo vs. $1,200 w/the broker) will come back to me?

The broker's rates are higher than Wells Fargo's in most cases, and his fees are higher when you eliminate the large difference in the escrow requirements. The broker said that FHA streamline rates are about .125% higher than regular FHA rates, is this correct?

Another oddity: there was an advertisement in last Sunday's local paper from his company that indicated a 3.00% rate for a 30 year FHA loan (for a $165,000 loan with a 740 credit score). He offered me 3.375 for the 30 year FHA, 3.50% for the 30 year FHA streamline w/all closing costs out of my pocket, and 3.75% for the 30 year FHA streamline w/no closing costs + $1,200 for escrow. Is this due to the smaller loan amount? Our credit scores are well above 740.

Wells Fargo gave me nice "approximate loan cost illustrations" that show a break down of fees, he gave me the numbers listed above via a combination of phone calls and e-mails. He said that he will provide a GFE when I decide which loan I prefer.

Should I tell him what Wells Fargo offered in an attempt to get better offers from him? Should I just try to find another broker for more quotes?

My head hurts.

Quote from tiedyed1 : ~2900 in Closing costs, or closing costs and escrows? I am not here to self promote so please do not misconstrue this post. I process California FHA Streamlines regularly and the actual closing costs for a 163k FHA Streamline Refi I closed this week was $1514 (exact figures). If that $2900 includes the establishment of new escrows then that may make sense; otherwise it is almost twice what it should be. Again, you need to compare the costs, then the rate and the associated lender credit. All three of those components are needed to know you are getting the best loan. (i.e. low rate is worthless with high costs; and costs need to be compared against the offsetting lender credit to come up with a net figure.) All I am stressing is that everyone should obtain more than one quote with at least one from an experienced mortgage broker with good wholesale conduits. They can get the refi done very competitively and in half the time. -Adam Old Hippy & Mortgage Pro

The $2900 included everything, title, escrow, origination fee, partial month interest payment...everything. Sorry, I just call of that closing costs.

In efforts to keep this thread updated I felt it appropriate to alert readers/subscribers that Mortgage rates have increased over the past few weeks but are still very good for those with higher rates that are considering refinancing.

While my crystal ball is not better than anyone elses I do feel that there is a sentiment that is gaining momentum which indicates we may possibly be at the start of coming off a bottoming of rates and if there is any trend it is now upward. (This can always reverse if next months GDP is as bad as this mornings announcement was.)

Currently, on FHA Streamlines, the rate of 3.25% no longer provides any notable lender credit and, depending on loan size and costs, the rates of 3.50-3.875% are closing with sufficient lender credits to cover closing costs.

Where it moves from here no one can say, but I do feel for those who were waiting to see if it would go any lower should reconsider their position based on the recent direction of markets and prevailing economic indicators.

Thanks;
-Adam
Old Hippy & Mortgage Pro

This may be a dumb question, but what's the best way to find a reputable mortgage broker in Florida? I know I can Google, but I just feel like anyone could put an ad online these days. I want a broker to shop rates for me to do a Streamline FHA refi, and I want to find someone I can trust.

Quote from heather719 : This may be a dumb question, but what's the best way to find a reputable mortgage broker in Florida? I know I can Google, but I just feel like anyone could put an ad online these days. I want a broker to shop rates for me to do a Streamline FHA refi, and I want to find someone I can trust.

Friends or family?

Hey tiedyed, Do you know if the proposed changes to MI for FHA is going to be added for the life of the loan? And if so, when does it take effect?

Quote from tiedyed1 : In efforts to keep this thread updated I felt it appropriate to alert readers/subscribers that Mortgage rates have increased over the past few weeks but are still very good for those with higher rates that are considering refinancing. While my crystal ball is not better than anyone elses I do feel that there is a sentiment that is gaining momentum which indicates we may possibly be at the start of coming off a bottoming of rates and if there is any trend it is now upward. (This can always reverse if next months GDP is as bad as this mornings announcement was.) Currently, on FHA Streamlines, the rate of 3.25% no longer provides any notable lender credit and, depending on loan size and costs, the rates of 3.50-3.875% are closing with sufficient lender credits to cover closing costs. Where it moves from here no one can say, but I do feel for those who were waiting to see if it would go any lower should reconsider their position based on the recent direction of markets and prevailing economic indicators. Thanks; -Adam Old Hippy & Mortgage Pro

Thank you for your detailed, and continued advice, in this thread. I am right in the sweet spot where getting an FHA Streamline is more advantageous to me than going with a conventional Refi. I would not have known this if I hadn't read through your posts!

I do have another question though, if I go through an FHA streamline refinance now, will I be able to purchase a new primary residence using another FHA loan in a year or two, even if I keep my current property as a rental? Thanks for your advice.

Quote from madmarttigan : Thank you for your detailed, and continued advice, in this thread. I am right in the sweet spot where getting an FHA Streamline is more advantageous to me than going with a conventional Refi. I would not have known this if I hadn't read through your posts! I do have another question though, if I go through an FHA streamline refinance now, will I be able to purchase a new primary residence using another FHA loan in a year or two, even if I keep my current property as a rental? Thanks for your advice.

Great question as many are not aware that there are circumstances where you can have more than one FHA loan. The MAJOR factor is that the FHA loan MUST be for an owner occupied primary residence.

Now, sometimes this is not easy to demonstarte without a doubt, so I'll give a few examples:

* Your decide to rent out your current home and it becomes an investment property. Your Tax returns even reflect that house with an FHA loan is on your Sched E with rental income and you are currently renting at another address. If you purchase a new home to be used as your primary residence, that makes sense and you will be eligible to purchase that home with a FHA loan product.

* .A borrower may be eligible to obtain another FHA-insured mortgage without being required to sell an existing property covered by an FHA-insured mortgage if the borrower is
relocating, and establishing residency in an area outside reasonable commuting
distance from his/her current principal residence.

* A borrower may be eligible for another home with an FHA-insured mortgage if the number of his/her legal dependents increases to the point that the present house no longer meets the family’s needs. In these cases the borrower must provide satisfactory evidence of the increase in dependents and the property’s failure to meet
family needs, and that the Loan-To-Value (LTV) ratio on the current home equals 75% or less, based on the outstanding mortgage balance and a current appraisal. If not,
the borrower must pay the loan down to 75% LTV or less.

* .A borrower may be eligible for another FHA-insured mortgage if he/she is vacating a residence that will remain occupied by a coborrower. For example: A couple is divorcing and the vacating ex-spouse will purchase a new home.

Hope this helps answer your question;
-Adam
Old Hippy & Mortgage Pro

Quote from is_250 : Hey tiedyed, Do you know if the proposed changes to MI for FHA is going to be added for the life of the loan? And if so, when does it take effect?

Unfortunately it does indeed appear this is in the works and, while not officially announced, I have heard this will be effective on all new FHA Cases as of April 1, 2013.

It will be in an upcoming Mortgagee Letter which will not only increase the MI premiums by a bit more, but also dictate that the MI on FHA loans with new case numbers after that date will not have the ability to be removed even if the Loan To Value drops to 78% (which is the current threshold to remove the MI).

I will definitely post confirmation as soon as HUD releases the formal Mortgagee Letter regarding this matter.
Thanks;
-Adam
Old Hippy & Mortgage Pro

HUD has now officially posted Mortgagee Letter 2013-04, addressing forthcoming increases to MI premiums as well as significant changes regarding the term of Mortgage Insurance.
http://portal.hud.gov/hudportal/d...3-04ml.pdf

In respect to the increase in Mortgage Insurance premiums, these do NOT affect FHA Streamlines where the current loan is endorsed prior to June 2009.

Effective April 1, the annual MIP on most all scenarios goes up by 10bps.
However, the significant change, effective June 3, is the removal of the ability to remove MI once a loan hits 78% LTV.
Effective June 3, for all new case numbers with a LTV over 90% the MI will be permanent; and for <90% LTV it will be for a duration of 11 years.

How they come to these specific guidelines is mind boggling, and if you read the Letter you will see a variety of scenarios addressed.

Unfortunately this letter does not address any changes to the dates of FHA Streamlines qualifying for the reduced MI.
That date at this time is still for existing loans prior to June 2009.

-Adam
Old Hippy & Mortgage Pro