FHA Streamline letter

[JustaTexan]

Guys last night I got an interesting letter in the mail. It was from Benchmark Mortgage in Dallas, TX. I'm going to type some of this word for word.

Our records indicate that you currently have a FHA loan that you originally closed with ******* Mortgage with an interest rate that is above 6.5%, which is well above current market conditions. We work with ******'s past clients to help save them money on their interest rate and payments. You may have noticed recently that the Federal Reserve lowered the Fed Funds Rate to a stunning 2.25%. This lowering of the Fed Funds Rate has also lowered interest rates for FHA loans. We have a program to lower your interest rate with no money out of pocket.

This is a FHA approved program which will allow you to lower your interest rate and your monthly payment. Our FHA Streamline Refinance PRgram does NOT require you to Re-qualifiy, No Income, No Asset, or Credit History needed. You can skip one month's mortgage payment and may qualify for a mortgage insurance premium refund of up to $2,900, which is reimbursed to you after closing.

I closed on my mortgage March 2007 with a rate of 6.75, so that's not bad but 2.25% would be awesome. I've never been late or anything and my account is current. I'm doing some research on all this online right now but any input would be greatly appreciated. This just seems a little too good to be true.........

[JustaTexan]

http://www.hud.gov/offices/hsg/sfh/buying/streamli.cfm

Okay so this is a valid thing. But I don't know if I like the second paragraph here.

Lenders may offer streamline refinances in several ways. Some lenders offer "no cost" refinances (actually, no out-of-pocket expenses to the borrower) by charging a higher rate of interest on the new loan than if the borrower financed or paid the closing costs in cash. From this premium, the lender pays any closing costs that are incurred on the transaction.

I'm really interested in something like this because it would save me some $$$ but I'm just wondering what this company is getting out of this. You know? We all know they are not just going around "saving" people money for the good of the country.......lol.

[jq26]

Mortgage rates do not track short term FED funds rates. Despite the ST fed funds rate being decreased 300bps, I'm hearing about rates in the 5.75% to 6.5% range for buyers with 700 credit scores with 5-10% down. The yield curve has just become steeper (this helps keep banks solvent and is healthy but isn't a windfall for borrowers).

This is just an ad. I get 'em all the time. The companies just troll pubic records and take a peak. If you gave me your address, I can give you your mortgage amount, rate, type of loan, what lender, closing date, % of purchase price, etc.

Lenders will make their money somehow. So the lack of upfront fees is buried in higher interest over the life of the loan. If you are okay with that, then that is up to you. Personally, I'd rather pay a little upfront and then get close to or at par rate for the life of the loan. If you are stayng in the loan more than a couple of years, a breakpoint calculation would indicate that you are better off taking low interest and paying fees at closing.

I'd be real suspicous. This is a get-a-free-lunch type of offer. Give 'em a call if you'd like, but don't let the loan officer slick talk you into something without checking in with CIC.

[LVMortgageMom]

They aren't offering a rate of 2.25%. They are simply using the psychology of that number to get you to call. 6.75 is not an awful rate and if they can't offer you at least 1% point lower then I would say that it probably would not be worth it to proceed. FHA streamline refi's do exist, but they are not "no cost" loans.

[JustaTexan]

Thanks for the replies you guys! I have not called this company and won't do so. I am doing some research on FHA refi loans though and it is looking like I might could qualify. Even 1% lower rate would lower my payment from $601 to like $540 a month. I know some of you are saying, "well if your house payment is already that low, why bother," but every little cent matters to me!

Any experiences with FHA refinances? Also when I purchased my home 13 months ago, it appraised for 74,500 and right now the balance is 71,200. So, although there is not much, there is a teeny bit of equity.

[amortgageman]

Thanks for the replies you guys! I have not called this company and won't do so. I am doing some research on FHA refi loans though and it is looking like I might could qualify. Even 1% lower rate would lower my payment from $601 to like $540 a month. I know some of you are saying, "well if your house payment is already that low, why bother," but every little cent matters to me!

Any experiences with FHA refinances? Also when I purchased my home 13 months ago, it appraised for 74,500 and right now the balance is 71,200. So, although there is not much, there is a teeny bit of equity.

First of all, to qualify for a streamlince refinance, you must lower your interest rate by at least one percent. There are basically no qualifications, except that you must be current on your loan. That is one of the many reasons why I like FHA loans, despite the MIP premium. One of the main other reasons is lenders have many more options that they must offer to you before foreclosure can proceed.

Yes, technically, they can offer you a "no cost" refinance, but in order to do this, there must be enough "yield spread" added to the loan (which results in a higher interest rate to you). Given that, I would find the lender hard pressed to be able to lower your interest rate by one full percent at this time, on a "no cost" refinance.

And also as mortgagemom indicated, the refinance must make sense. You will need at least one percent reduction. Also, keep in mind that UFMIP will be charged again to your loan (partially offset by a refund of the UFMIP you already paid).

Since you have only been in the home one year, it is important to note that a streamline refinance may not exceed the original loan amount. You may have to come up with some out of pocket expenses in order to do so.

My personal advice would be to wait things out a little while longer, because we are definitely in a downward trend in interest rates, and six months form now, we will probably be looking at even lower mortgage rates.

[JustaTexan]

Thanks for the advice! Very informative. I have decided that I am going to wait to refinance it.

[Moneedshelp]

sounds like waiting might be a good idea

[brokesoul]

Hi all I lurk and learn from time to time here and am trying to repair and improve my credit as well mainly by never having another cc in my life. I like the debit card it can be used the same way and ya don't have a bill in the end. that said - my dilemma is I and my domestic partner has a fha mortgage and we have quite a bit of equity. my partner now owes income taxes and of course a lien was put on and its ugly, and they want the equity NOW. So was wondering about this streamlined FHA to refinance to pay off the tax lien. We tried conventional and regular fha thru our present lender, but they say now they prefer for partner to have a pmt plan on taxes for 6 months before they can do it. seems neither the lender nor the irs wants to budge to come out favorable for all involved. and well i am stuck in the middle. what i am told by cpa is that irs will take house, sell it for taxes, and mortgage lender and I will just be out period. there is homestead protection in my state but don't know just what that will do for me. If the lender would have done this now, the lien would be gone, and there would still be equity left over so i am just at the end of my rope with this. any ideas? thanx.