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No Cost FHA Streamline

I would like to refinance my FHA loan with a balance of $268,000 and 5% interest rate. The new rate is 3.25%. The lender offers to pay Up Front Mortgage Insurance premium + all closing costs. Does it sound real? Or more like a scam?

Thank you.
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January 19 2013 - Oceanside
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Answers (8)

So did you get a quote in writing? Your UFMIP will be aprx $4700 and Title charges around $1300 so aprx $6,000 for that. Then your originator's fee will be added so if it is $3,000 that totals $9,000 or 3.36%. You may get that on a 3.25% rate depending on your credit score. In addition to the closing cost is your prepaid expense, the new escrow, which will determine your cash to close. Once you know how much that will be you can determine if you can bring that amount to closing or you may change using the lender credit to pay the closing fees and escrow and financing the UFMIP. Even though you finance the UFMIP to reduce the cash to close you can lower the new loan balance back down after applying the escrow refund from your existing lender.     
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January 24 2013
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Our loan was originated after June 2009.
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January 23 2013
$6,269 PROFIT TO LOAN OFFICER
========================
Apparently in Richard's world there's no overhead (an old Dr Dimento tune comes to mind now...":they're coming to take me away, ha ha...")


15 Years ago it costs on average $1,400 to do a loan, today the figure is over $5,000 (thanks to all the new regulations).

on another note,Ginnie Mae (FHA) pricing has always followed a bell curve, the reduction in credit between 3.25% and 3.125% is very significant and makes the difference between all costs paid by the lender to no costs paid by the lender. 
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January 19 2013
If your loan was originated (endorsed by HUD) before June of 2009 it might be possible. In this case the UFMIP is only going to be a few dollars and there should be enough rebate to pay the closing costs.

But there is no way it would cover the cost of prepaid interest and setting up a new impound account for taxes and insurance too (required on all FHA Streamline refinances). So you would at least have to come to closing with the amount needed to set those up. Something that is very common with these deals and is easy for most people since you end up not having a payment the month after closing (always make sure to make your payments in the month you are closing in).

As for Richard's comment saying it is a fat deal for the lender and you can do better. OK. I'd like to see that. What he's saying is you should be getting at least a 3.125% (lower?) rate on a no cost FHA Streamline. I have the rate sheet to every lender on the planet at my fingertips and that deal doesn't exist. 

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January 19 2013
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Apparently where Richard lives, they don't have to pay interest or pay into impound accounts for taxes and insurance. Everything about his post is misleading and pure SPAM!
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January 19 2013
The most important question to answer is when did you close the loan you have now? That will determine if you can get all closing costs and the UFMIP paid at 3.25%.
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January 19 2013
If you are going through a mortgage broker than this is not a scam. Using lender credit to pay closing costs is very common. Just make sure they are able to lock in your rate as promised!
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January 19 2013
A 3.25% FHA streamlined refi pays 3.375% in Yield spread premium, or in your case $9,045.

FHA upfront insurance, if your loan was before 5/31/09 is only .01% or $26.80.

+$  9,045 yield spead
- $       26 MIP Premium
- $ 1,250 Title, Escrow, and recording
- $ 1,500 Underwriting and processing
=========
$6,269 PROFIT TO LOAN OFFICER

Not a scam, but a real fat deal for the lender. You can get a better deal elsewhere. Reasonable profit would be 1% OR $ 2,680. Which means you would be paying $3,500 too much.

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January 19 2013
 
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