HUD has announced revised guidelines for FHA streamline refinances that will go into
effect with case numbers issued on or after November 18, 2009 (60 days following September 18, 2009 the date of the Mortgagee Letter).
FHA streamline refinances take place when an existing mortgage is insured by FHA and is refinanced to a new FHA insured loan.
Here are a few of the changes:
- Employment and income will now be verified.
- Credit scores will be disclosed.
- Funds for closing must be verified.
- The borrower must have made at least six payments on the FHA insured mortgage.
- There must be a "net tangible benefit". This can be:
- a reduction in total mortgage payment of at least 5%;
- refinancing from an adjustable rate mortgage to a fixed rate; or
- reducing the term of the mortgage (from a 30 to a 15 year amortization, for example).
Streamline refi's without an appraisal loan amounts will be limited to the outstanding principal balance minus the UFMIP (upfront mortgage insurance premium) refund plus the new UFMIP. In order to have closing costs rolled into the mortgage, you will need an appraisal.
Streamline refi's with an appraisalare still up to a 97.75% loan to value and closing costs can be rolled into the new mortgage except for discount points. Discount points must be paid for by the borrower's assets (which must be verified) as any closing costs that exceed the 97.75% LTV limit.
If there is subordinate financing (second mortgage) the total allowed combined loan to value is 125%.
The underwriting belt keeps getting tighter which is one reason why if you are considering refinancing, you may want to do so sooner rather than later.
Mortgage Master is a Direct Endorsed HUD lender and I have been helping Washington State home owners with FHA mortgages for over nine years. PS...rates are also very attractive right now!
