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Possible to do FHA Streamline / Rate Reduction program?

I called my lender (US Bank) to ask if I could do this and they said no, because I did a 0% down loan when I bought the house, and I do not have 20% equity yet so there is a lien of some kind keeping me from taking advantage of the program.  It sounded a little fishy considering most people using this FHA loan did what I did and bought with 0% down.  I don't have the money and will not by the time the interest rates go back up.  I'm sitting on a 6.2% now from 2006 which is very ugly and I'd like to lower it before time is up...

thanks in advance for the assistance!
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February 05 2011 - Topeka
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Looks like you did get some kind of gov funding at the time of purchase. You can do a streamline refinance for the 95% of the loan and subordinate the 2nd lien. You can also check if the value of the home is sufficient to combine the 1st and 2nd into one loan and do a brand new FHA loan. Check with a local bank or loan broker for details on the valuation.

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February 07 2011

If you have an FHA loan then you can do a FHA streamline mortgage. You don't need 20% equity to do an FHA streamline. If you didn't put any money down it sounds like you may have used a state bond program to finance the purchase of your home.

Can you look at your settlement statement and look at the lower section on the left hand side it will show all your credits?  Do you see a second mortgage listed as a credit?  If you have a second mortgage and you aren't making payments on it it must be a soft or silent second.  It's possible that US bank is saying they won't refinance because they have an overlay with their FHA product and won't refinance if they have to have a resubordination or they have a CLTV overlay.

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February 07 2011
FHA loan terms don't change. 

When you purchased the home, how much did it appraise for?

What is the situation with the "other lien"?
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February 05 2011
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I found my mortgage paperwork, and it's very confusing.  Two boxes are checked on the contract, one for a new mortgage for about 95% of the purchase price, and the other for FHA loan, 203B.

The original loan was countrywide and later sold to US bank so things might have changed, but I don't have any additional paperwork.
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February 05 2011
FHA loans require 3.5% downpayment so I guess I don't quite understand how you could have bought your home with FHA loan and 0 down. 

I'm sorry, I re-read your original statement and I'd have to speculate that you have a second lien which you borrowed for your initial down payment.  Is that correct?  

If so, it is likely that you will need the secondary lien holder to agree to re-subordinate their position in order to refinance. 

6% is not such a bad interest rate.
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February 05 2011
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My mortgage paperwork says FHA Loan and I remember what it was when signing all the paperwork.
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February 05 2011
If you ''did" a loan with 0% down it's quite likely it was not an FHA loan and therefore you wouldn't be eligible to conduct an FHA Streamline Refinance now. 

Only FHA loans are eligible for FHA Streamlines.
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February 05 2011
 
Related Questions
Possible to do FHA Streamline / Rate Reduction program?
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Latest answer by Rohit Mohan
February 07 2011 | 7 answers
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