As many as three million borrowers with government-insured mortgages may be eligible for lower borrowing costs when they participate in streamlined Federal Housing Administration (FHA) refinancing, according to the White House Administration on Tuesday, March 6.

The fresh round of changes from the administration affects loans the Federal Housing Administration insures and would reduce fees on those mortgages for borrowers previously unable to borrow at lower rates.

Those using the so-called “streamline” refinance program allows FHA borrowers to win new FHA-backed loans without going through some of the more stringent guidelines that make locking into new loan terms more challenging.

The Obama administration said it will lower the costs on up-front mortgage insurance premiums to 0.01 percent for streamlined refinancings of FHA loans. The White House also said it will cut the annual fee for these refinancings in half to 0.55 percent.

Eligible borrowers for the streamline refinance program must have taken out those FHA loans before June 1, 2009.

The changes to the government’s streamlined refinancing program could help the typical FHA borrower find “significant monthly savings,” according to the administration.

Since mortgage rates are at historic lows and hover around 4 percent, the administration estimates a typical FHA borrower with $175,000 outstanding on their loan could reduce monthly payments to $915 a month and save $100 a month more than the borrower would have under current FHA fees.

Many Veterans who have bought a house over the last few years have financed their home with a VA loan – possibly because with a VA loan, it is possible to get 100% financing and not have to pay a VA funding fee.

And when interest rates are low, the good news is that Veterans who currently have a VA loan can take advantage of lower rates without having to do a “conventional refinance” — they may be eligible to participate in the VA streamline refinance program.

VA Streamline Refinance: For VA Loans Only

The VA streamline refinance was designed to help Veterans who have VA loans get into a lower interest rate without having to completely re-qualify for a new VA loan. The documentation requirements are lower than getting a regular VA loan and an appraisal may or may not be required by the lender. This is particularly of interest for many people in Arizona (and other parts of the country) who may currently owe more on their mortgage than what their home is worth. If an appraisal is required, then it makes it impossible to refinance.

VA Streamline Refinance: Work With A VA Lender

When getting an FHA or VA streamline refinance done, it is important that you work with a VA approved lender – because only VA approved lenders can actually help you with a VA streamline refinance loan. If you are interested in learning more about the VA streamline program or want to see if you can possibly qualify for a VA streamline refinance, be sure to contact us today!

No matter whether you are refinancing (excluding some streamline refinance programs) or buying a home, it is safe to say that the game of getting a mortgage changes at least monthly if not weekly or even daily. The same story goes with the credit scores it takes to get a mortgage. You may think that getting a mortgage requires great credit scores – but this just isn’t the case.

Mortgage programs like VA loans or FHA loans allow for applicants to qualify with, in some cases, credit scores as low as 500. While other mortgage programs from Fannie Mae and Freddie Mac to require higher credit scores. What we have to watch out for is the change in the lending guidelines that looks at credit scores as these change often.

Now for what we can say with confidence is that if you have lower credit scores you will not be able to take advantage of low va rates or the lowest rates other mortgage programs as lower scores typically means that you’ll pay a higher interest rate.

Why is this? Well, without going to far into the deep end of the pool in terms of explaining this in technical jargon I’ll explain it like this.

Lenders live in the world of being judged by their investors (Wall Street) and other bank ranking entities for making low risk loans with as minimal defaults. They balance the risk in their portfolio against the profits of their portfolio. At the same time, because of governmental lending guidelines designed to ensure that lenders spread out who they lend money to from the most qualified to the least qualified, lenders need to make loans to higher risk loan applicants. In the case of mortgages – higher risk is directly associated with lower credit scores.

For the lender, they loan to high credit score applicants with lower interest rates and fees and to higher risk applicants with higher interest rates and fees. The job of the lending managers is to balance who they loan money to so that they don’t get too much high risk loans in their portfolio as compared to their lower risk loans. The mortgage crash of several years ago was directly tied to this balance where too many lenders made higher risk (and higher profit) loans than they should have. And when the economy turned or the bubble popped, many of these lenders went out of business because they couldn’t weather the number of missed payments to keep the lights on.

The bottom line here is that if you want to get premium rates – get your credit scores up before you try to get a mortgage. In the long run, it doesn’t take a long time to get your scores up if you do the right things, but if you don’t you will be paying unnecessarily higher payments for your home over the long haul.

Are you looking for lower interest rates and to reduce your monthly mortgage payments? This may be possible even if you are upside down on your current FHA loan. There is now a FHA Rate Reduction Streamline Refinance available for people with existing FHA loans. This was designed to permanently lower your monthly payments and keep you in the FHA program and to streamline the whole process.  The process requires much less documents, processing and costs than your original FHA loan.

There is no appraisal done which is important in AZ because you won’t run into value problems. Therefore you will be able to take advantage of the program even if you owe more than the property is worth. Plus you won’t have to pay for the appraisal which is usually between $400 and $600.

There is also no income qualifying. You just need to verify that you have an income source, but how much you make and how much you owe is not part of the qualifying process. HUD may change this at any time however. Even if you are collecting unemployment you don’t have to worry about re-qualifying, though you will need to provide proof of pay.

There is also much less processing. Since you have already qualified for the FHA loan once so as long as you have maintained a decent credit profile that original qualifying carries over into your new streamline. No more waiting and wondering if you qualify.

There are also much lower closing costs. We are able to get discounts on the closing costs because these loans are a whole lot less work. Larger loan sizes may be able to have the bank pay for all closing costs.

Finally you might get to skip a payment! Lets you go the first month without making a mortgage payment. Your first payment will be due 30 days after your closing.

When you close on your FHA streamline do it at the end of the month. When you pay off the old loan you have to pay for a full month’s interest regardless of when it closes. By closing at the end of the month your new FHA loan will only have a couple of days of interest to pay and depending on the size of your loan, this strategy alone could save you hundreds of dollars.

If you have an FHA loan right now, have made at least 6 payments, have a middle credit score of at least 640, have been on time with your payments for the last 12 months and if your loan is in AZ then contact us today to see about lowering your monthly payments and reducing your interest rate.

Can you still take advantage of lower interest rates and refinance even if you owe more on your mortgage than your house is now worth?  You now can do a FHA streamline refinance without an appraisal and have it still make sense financially.

Thanks to the FHA streamline program, it is possible to lower your interest rate and get a lower mortgage payment each month without having to completely re-qualify for a new loan. FHA streamline refinance changed last fall, but it is still viable to do an FHA streamline with no appraisal required. This is designed for those who are looking to refinance, but who owe more on their mortgage than their home is actually worth.

It is true that HUD made it typical that if a borrower opted to not have an appraisal, it meant they couldn’t refinance their closing costs — they would have to bring them to close, but with rates as low as they are now it is possible that you can choose a slightly higher than normal rate and have your mortgage lender pay for the closing costs.

With an FHA streamline without appraisal, you can reduce your closing costs because there is no appraisal cost, and your lender can cover some of the costs. Most of the people who do the FHA streamline refinance without an appraisal bring their mortgage payment that they would have deferred (some people call it skip) to close. Most often, when a person participates in the Arizona FHA streamline program, they will still be in a FHA 30 year fixed rate loan with an interest rate that is lower than what they had before.  Often this reduced interest rate can mean hundreds of dollars of savings each month in interest.

There is no better time to act than now to reduce your current interest rate through the FHA streamline refinance program without an appraisal. Just ask your loan officer about the FHA streamline without appraisal program.

Arizona Short Refinance: Is It Really Possible?

Many people I speak with ask me if it really is possible to do a “short refinance” – or in other words, refinance your house even though you owe more than it is worth. Here in Arizona, this is a big problem — many people owe more than their home is worth.

The short answer is “yes it is possible” but if you think you want to do an FHA short refinance, be ready for a long and difficult road. Lenders aren’t exactly excited about helping you do a short refinance, so you will need to be patient and persistent.

We can easily talk to you more about a short refinance and tell you what to expect. The first thing that you will need to obtain if you are interested in a short refinance is a payoff statement from your current lender saying that they are willing to accept less than you owe. Typically, you will want to get a payoff of about 95% of what your home is currently worth so that you can get a new FHA loan when you refinance.

Getting the short payoff is the key — after that, it is a much smoother process.

Have questions about whether or not a short refinance is in your best interest? Give us a call, we are happy to help you along the way.

Many people across Arizona refinance their home for one reason or another — and each situation is different. Generally speaking, a mortgage is often the largest debt that a person has and so most people don’t take the decision to refinance or not lightly — and they spend a great deal of time analyzing whether or not it is right for them.

Here in Arizona, here are just a few of the reasons that we see people making the decision to refinance:

When Mortgage Rates Drop:

Whenever rates drop here in Arizona, most people will refinance to get a lower interest rate and a lower payment. The lower the interest rate, the lower the payment — generally speaking.

Homeowner Needs Lower Payments:

Lowering a mortgage payment can be achieved by lowering the mortgage rate, lengthening the loan term, combining two or more loans or removing mortgage insurance.

Homeowner Wants A New Mortgage Program:

Many people move from an adjustable rate to a fixed rate mortgage so they can avoid a higher payment when rates move up.

Homeowner Needs To Consolidate Debts:

In Arizona, debt consolidation loans are popular. Paying off consumer debt can sometimes make sense – and homeowners sometimes want to use the equity in their house to pay off other debts. This makes it simple to have one monthly mortgage payment that is easy to manage and is locked in at a low interest rate.

If you are thinking about refinancing your house in Arizona, there are certainly plenty of Arizona mortgage lenders to choose from. In general, you will have the choice between the following types of lenders here in Arizona:

• Mortgage Brokers
• Mortgage Bankers
• Large Deposit Banks Who Do Mortgages

Arizona Mortgage Brokers

Although there aren’t as many mortgage brokers in Arizona as their used to be — there are still plenty of mortgage brokers floating around who would be happy to help you with a loan. Mortgage brokers don’t work for just one lender – they are able to shop your loan to quite a few lenders and will then place your loan with the lender who has the best rates and fees.

Usually.

If you use a mortgage broker, be sure to shop wisely – otherwise the mortgage broker will find the deal that is best for him – and not necessarily the best deal for you.

Arizona Mortgage Bankers

There are also mortgage banks in Arizona who specialize in lending money to people for mortgages only. They don’t take money for deposits and don’t let people have checking accounts. They only lend money for mortgages. These lenders have loan officers who just work for them and push their products to consumers. The mortgage bank usually will have in house underwriting and can help you get your loan — but be sure to shop for the best rates and fees as well.

Large, National Banks

Larger national banks can also help you with your refinance here in Arizona, and you can easily just walk into one of their branches and someone can usually help you get started. Some have loan officers in the local branches, some do not – but if you just walk in they can help get you started.

Getting your refinance done in Arizona is easy – it is just a matter of who you choose to work with. And because each type of lender has pros and cons, you are wise to shop around for the best deal – no matter where you get it from.