Arizona Mortgage Broker Blog

THE BENEFITS OF A FHA STREAMLINE REFINANCE WITHOUT AN APPRAISAL

    For homeowners who currently have an FHA mortgage on their primary residence, a FHA Streamline without an Appraisal is an excellent option to lower their monthly payment! This type of refinance is particularly beneficial to those with a FHA mortgage who are upside down in their home. Since no appraisal is necessary, the current market value of the home is not taken into account.

In fact, there are no ratios on a FHA Streamline because there is no re-qualifying for the new mortgage.  This means that there is NO credit check and NO income or asset documentation is needed. The lender simply needs a current payoff statement, a mortgage rating showing there have been no late payments on the mortgage (in the past 12 months) and a minimum credit score of 620. (please contact me if you have a score less than 620, as I have one lender who doesn't require credit scores)  Any debt reporting on a full "tri-merge" credit report isn't reflected on a mortgage rating. Again, since there are no ratios, credit debt isn’t considered in qualifying for the new loan.

On a Streamline Refinance without an Appraisal, the new base loan amount cannot exceed the original mortgage balance. So for example, if the current mortgage note shows a balance of $205,500, the new mortgages BASE loan amount can't be more than this amount. The base loan amount plus the new Up Front Mortgage Insurance Premium determines the new TOTAL loan amount on an FHA loan. It is however, important to remember that a refund of the unused portion of the "UFMIP" will be issued through the new transaction. This essentially decreases the cash required to close on the new loan.

Since NO appraisal is needed, the borrower is required to come to closing with some cash out of pocket. Personally speaking, I ask my clients to come to close with a full (PITI) mortgage payment, then issue a broker credit for the amount over this. Also, most of my clients are able to obtain a new interest rate that is a point lower than what they currently have. More often than not, this allows me to avoid having to charge an Origination fee thereby allowing the client to come to closing with a cash amount equal to a full mortgage payment.  The amount of the broker credit varies depending on the specific transaction.

Some of the benefits of a Streamline Refinance without an Appraisal are:

• a lower interest rate
• a lower monthly mortgage payment
• the rate is assumable to potential homeowners so the lower the rate, the better
• NO APPRAISAL means the opportunity to refinance even when a borrower owes more than the home is currently valued
• a refund (through the new transaction) of the unused portion of the Up Front Mortgage Insurance Premium
• Streamline process means minimal documentation is needed

Here is an example to put the potential savings into perspective:

EXAMPLE: On a $300,000, 30 year fixed mortgage, with an interest rate of 6.75%, the (principal and interest) mortgage payment would be approximately $1945.00.

POTENTIAL SAVINGS: By simply reducing the interest from 6.75% to 5.5%, the monthly payment would be approximately $1703.00 a month. That's a monthly savings of $242.00! Or $2904.00 in annual savings. $29,040 over a decade, $87,120.00 over the course of the 30 year term.

The streamlined process only requires the file to contain the following documentation, some of which is needed from the borrower:

• Full application package with Application/Good Faith Estimate/Truth in Lending, State/Lender/HUD required disclosures*
• FHA Connection documentation (which is obtained by the broker)
• Social Security verification (copies of the borrowers drivers license and social security card)*
• Copy of the Mortgage Note and Deed of Trust (for the current mortgage)*
• Current copy of payoff from the current mortgage holder
• Mortgage rating with credit scores from all three credit bureaus
• Current preliminary title report
• Proof of homeowners insurance (obtained by the broker)*

The basic process of a FHA Streamline Refinance without an Appraisal is as follows:

• Mortgage Consultant and Borrower(s) discuss the borrower’s current rate. Then determine the best available rate to ensure a refinance is worthwhile
• Mortgage Consultant locks rate in with the lender per approval from borrower
• Borrower collects and sends (via email/fax) documentation to the Mortgage Consultant (see * items above)
• Loan is submitted to the lender
• Upon loan approval, broker clears any conditions (if applicable) in order to move towards loan documents being prepared/drawn by lender
• Loan documents are drawn by lender and sent to the closing agent
• Closing agent contacts the borrowers to set appointment for signing
• Closing agent meets borrowers for signing (my closing agent comes to my borrowers home/place of business to make signing as convenient as possible)
• From the date the loan documents are signed, there is a three day Right of Recession period. So for example, if a borrower signs on a Monday, three full days must pass before the loan can fund. In this example borrower’s signing on a Monday would have their loan funded on that Friday.
• Loan funds and records

So if a borrower's loan funds in September, the first payment on the new mortgage wouldn't be until November 1st. This is applicable for any mortgage not just FHA. Depending on the month the loan funds, there will always be a full month that is "skipped" before the new payment is due.

Interested in starting the process?

Simply email me at laura@martellmortgage.com or complete a loan application at www.martellmortgage.com/loanapplication.  I'm available 24/7 via email to answer any questions you may have and determine if an FHA Streamline Refinance without an Appraisal is best for you!

FACT - there is no one answer for everyone. There are several factors to consider when thinking about a Streamline FHA refinance of your current FHA mortgage. Below are a few helpful tips to get you started on the right track. A Streamline FHA Refinance will not be for everyone but in today's marketplace, an FHA refinance will be suitable and beneficial to most.

Do you have a 30 year fixed rate lower than 5.375%? If this is the case, you might not be one of the lucky ones who will benefit from a refinance. You are one of the lucky one's who was able to lock in a great interest rate. You may still want to consider a refinance if you plan to pay the home off or stay there another 5-10 years.

Are you planning to sell your home in the next 2-4 years? If you answer yes, then the answer will more than likely be no to a refinance, UNLESS, you are paying over a 6.5% interest for a 30 year fixed rate.

Has you mortgage insurance been cancelled on your FHA mortgage? Again, if you answer yes, a refinance may not be in your best interest, BUT, if paying higher than a 6 or 6.5% interest rate, it could be very beneficial.

Have you paid on your FHA mortgage for more than 10 years? Once again, a yes answer could mean a refinance may not be in your best interest. Rates weigh heavy in the total analysis. I would not use a definite no on this one either. I would suggest you seek advice from a very reputable and knowledgable broker. A good broker should be able to explain the cost savings or periods of time.

Those are 4 of the most common factors I can think of that might not make refinancing an FHA mortgage very helpful in the long run. There are many reasons why it will be of huge benefit for you to refinance though. I will list the most common factors I can think of.

Is your FHA interest rate over 5.375%? If you answer yes to this one, you really should consider speaking to a well versed mortgage broker. Interest rates are at 5% today with options to get in the 4.75% or even as low as 4.5%. These savings can be huge over the course of paying off your home or having more equity available to you when you decide to sell your home.

A real example is below..... 

Using a loan amount of $200,000 with an original FHA rate of 6.5%. Your principle and interest payment is $1264 a month. If you refinance into a 5% FHA loan your payments would be $1073 a month for a monthly savings of $190 a month. Sounds good, RIGHT? Listen up, here is where it get's interesting. Say you refinance into a 5% rate BUT you continue paying the same payment you are used to paying. This applies an extra $190 a month to your principle balance. I know your thinking so how is that interesting....not seeing it yet? Well, how about if I tell you paying this little bit extra every month, you will only pay on the home for 21 years. Then you own it after 259 payments instead of 360. Now if you take the savings of 101 months times your "WOULD BE MORTGAGE PAYMENT" you end up saving $127,664. Yes I typed that right and it is not a typo. You will save over $127 thousand in payments compared to keeping the 6.5% rate you currently have. Does that sound interesting to you yet? I thought so! Speak with someone who knows how to tailor the information to your specific scenario and you too will see some serious savings.

Do you owe more than the home will sell or appraise for? Then this might be for you. If you have owned the home for 3 or more months and have not been late, you can do an FHA streamline refinance. You will not need an appraisal and documentation will be minimal. You can refinance as long as you do not increase the original loan amount. You will need to come in with some or all closing costs to avoid increasing the loan amount. The savings alone can repay the closing costs in as little as 12-36 months. Then you can begin adding the savings of refinancing.

Are you on an Adjustable Rate Mortgage (ARM)? YES, this is for you! If you plan to keep the home, you must consider getting on a fixed rate mortgage to prevent you interest rate from adjusting. If you gamble with your financial freedom, you could be rolling the dice in the dark. It is not worth the few dollar savings each month to potentially be out on the street when the bank starts foreclosure from missing payments you can no longer afford. In my opinion, it just is not worth the risk.

FHA interest rates are near record lows FHA mortgages are assumable House values have dropped in AZ No appraisal is required Limited documentation is needed Savings are HUGE!

Apply online for your FHA Streamline Refinance

If you are looking to purchase a new home using a down payment assistance program and an FHA Loan Program, you have come to the right place.

Our team of professional consultants will guide you through the process of obtaining the approval of FHA loans using a down payment assistance along with seller concessions for closing costs.

Yes, that is right, seller concessions for closing costs. FHA will allow for seller concessions of closing costs if your real estate agent writes this into the offer and is able to get the offer signed by the sellers. Once this is signed, you will be able to apply the amount contributed towards closing costs or additional down payment if you have the money for closing costs in a bank account.

There are many neat features to a home loan where FHA can help but you need to know what and how before you get too involved in the process. With a Sterling Home Mortgage professional, you can rest at ease knowing your agent is trained with the latest programs and is current on all licensing required by State Law.

Continuing education is one of the many reasons you should call us first, second, third or even fourth. The important part is making sure to call us at some point so we can help you.

If you are looking to buy a home in Arizona, we recommend Re/Max Integrity, Realtors with 3 office locations to serve you best.

"In regards to FHA declining markets:  

Lender will cut 5% from the max LTV on purchases and refis in declining market areas.  

Lender will not underwrite an FHA loan with a credit report older than 30 days.  

Lender will not underwrite a file that has been previously been turned down from another lender in FHA Connection

Lender will not underwrite files without DU/DO or LP findings. If DO/DU findings are use from another lender broker must supply Lender with their ID and Password for the DO/DU that was used.  

Attached is Lender's declining markets list.  

If you have files with us that you need to cancel due to this policy please email your list of files and names.  

I am very sorry for the hardship that this policy change will cause you."

State County

AZ Crittenden                     

AZ Coconiono                   

AZ Maricopa                     

AZ Mohave                        

AZ Pima                            

AZ Pinal                              

AZ Yavapai                       

AZ Yuma                         

CO Adams                          

CO Arapahoe                   

CO Broomfiled                

CO Clear Creek                   

CO Denver

CO Douglas

CO Elbert

CO Gilpin

CO Jefferson

CO Park

MN Anoka

MN Benton

MN Carver

MN Chisago

MN Dakota

MN Hennepin

MN Isanti

MN Ramsey

MN Scott

MN Sherburne

MN Stearns

MN Washington

MN Wright

CO Weld

WA Pierce

As Always, if you have a client looking to purchase a home in the Glendale, Peoria, Surprise or any area of Phoenix, please visit Re/Max Integrity Realtors

Don't just wait until it is too late and the bank will foreclose on your home. Call an area specialist who is familiar with short sale properties. Get your home listed and start taking offers for the bank. If you owe more than the net will be on the sellers net worksheet, the bank will accept less and you can get out from under the house. There may be some negative drawbacks to this option so consult your cpa or accountant.

Need to Short Sale a property Quick?

Just Click with Mike of RE/MAX Integrity in Glendale Arizona

Did you know you can use your 401k to put a down payment on a house you plan to purchase?

Well you can and you may even be able to avoid the taxes or penalties when you withdraw for this purpose.

I have created a web page specifically for this topic where you will find all the good information about this topic.

Visit my 401(k) down payment page.

Looking for a house and want daily updates when a home that fits you specified criteria hits the market? We can set this up for you and you will find it to be a great way to see listings first.

Every person and situation is a little different so there may not be a clear cut answer for this question.

A couple of things to consider....

• Do you have an ARM mortgage?
• Did your last broker/lender sell you a pre payment penalty?
• If applicable, when does your PPP expire?
• Do you have a fixed rate mortgage higher than 6.5%?
• Do you have 3-10% equity in your home still?

If you answered yes to any of these items, you may want to call a trusted broker today. Interest rates are near all time lows and if you can benefit from these low rates, why not? A good mortgage broker will be able to look up your information an let you know if you have a PPP, when it will expire as well as tell you when your adjustable mortgage will adjust and how high it will adjust.

You will need to contact a mortgage broker or lending institution to see what the current rates are for that day. Since rates are extremely volatile in today's market, I will refrain from posting rates on this blog. If you want to see current rates, visit my website rates page.

Visit Sterling Home Mortgage for more mortgage news and information

I have loans on rural housing in Arizona up to 102% for purchase. I will post complete details in one of my next posts but here are some highlights to this program. Email Sterling to find out more about this program.

• 102% financing for purchase based on appraisal.
• No minimum credit scores.
• No monthly mortgage insurance. 1 time guarantee fee.
• No asset requirements.
• No down payment.
• No first time buyer requirement.
• No payment reserves.
• No max on seller concessions. If > 6%, need comment from appraiser.
• 100% gifting permitted from uninterested party.
• 30 year fixed rate.

Some Arizona Cities I have looked up that qualify for this loan are below.

• Rio Verde
• Waddell
• Wittman
• Tonapah
• Buckeye
• Maricopa
• Sacaton
• San Tan
• Coolidge
• Florence
• Avra Valley
• Catalina
• Green Valley
• Pinetop
• Lakeside
• Show Low
• Payson

These are not the only cities so if your interested city is not here I will look it up for you. Info deemed reliable but not guaranteed.

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