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Every case is really an individual analysis particularly with a Streamline where the loan amount is specified by formulas not our traditional math. The old school "you need at least a point" menatality does not really hold any more but a quarter is not really a logical number unless you are converting from an ARM to a fixed and have that additional benefit. FHA Streamlince calculations typically start making sense when the loan is atleast a year old (knowing historical rates and the formulas) and really make sense if two years old or more. With all the valuation issues in todays market, the Streamline is a great opportunity to take advantage of todays rates. Careful though, many lenders are going to start requiring appraisals on FHA streamlince refinances. Currently most of the Streamlines I see that make great sense are folks that are atleast in the mid 5's and the ones with rates in the los 6's really score. The fee vs no fee discssion with Streamlines has a slightly different dynamic than that traditional dialogue because in many cases we are balancing rates with yield to keep the loan amount down so that the customer is not having to bring cash in at close.
My analysis with customers regarding fee vs no fee really boiles down to how long they are going to be in the home. 3-5 years is an average ROI. If it is a long term keeper it is typically better to take the lowest rate available and have the fees in the loan. It is hard to draw canclusions on a general basis as this analysis is very unique to the customer situation.
Simply put, it will be up to each individual and their goals or future plans. Just take how much they are saving each month, find out what the total costs are. Then figure how many months or years the months savings it will take to pay back the cost of doing the loan.Hope this helps! :-)
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