Profile picture for JohnJPinkowski IV

Should i streamline my FHA 30yr fixed loan?

I have purchased my home back in November 2010.  My 30 yr fixed loan percentage is 4.25%..  should i do a streamline refinance?
  • November 29 2012 - La Habra
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Answers (9)

Look at your mortgage statement and list the principal & interest amount, then the mortgage insurance amount. You stated the purchase price was $385K so if you put down 3.5% your P & I plus MI should be $2016. If that is correct then you have to meet the 5% savings so a new P & I / MI payment of $1915 or lower, dont think you will meet that mark.      
  • November 29 2012
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You will see a small savings right away and a larger savings later on after the mortgage insurance eventually falls off.    With 4.25% existing rate you should be able to barely pass the required 5% reduction test.

There is talk of new FHA loans requiring mortgage insurance for life of loan starting next spring, if this does get formalized, all the more reason to streamline now and lock in lower rate for life of the loan.   

The longer you plan to stay in the property, the more eventual benefit that you will derive.

Happy to take a look at numbers with you if you would like to contact me through my profile.
  • November 29 2012
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Profile picture for JohnJPinkowski IV
credit score is excellant 
  • November 29 2012
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Profile picture for JohnJPinkowski IV
The MIP rate is 0.55%. The home purchase amount was $385k and the current loan amount is $365k
  • November 29 2012
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Profile picture for Brian GFL Capital
Because your loan was taken out after June 2009 you would not be grandfathered into your current FHA MIP rate. you would be subject to the new higher monthly MIP rate which eats up a good majority of the payment savings that you would otherwise realize with the lower mortgage interest rate. that in itself will make it hard to obtain the 5% in overall payment savings that the FHA requires before approving an FHA streamline refinance.

it would depend on the outstanding balance on the mortgage to know if you will be saving the 5% but its probably not going to be as significant of a savings as you would initially think
  • November 29 2012
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John,

Under the current rules, an easy rule of thumb to answer this question is; can you qualify for an FHA Streamline refinance? If the answer is yes it is almost certain that the answer to your original question is also yes.

FHA Streamline refinances require your payment is reduced by a minimum of 5% and do not allow the lender to add closing costs onto the loan. As long as you would not have to pay big money out of pocket to make this happen it is as close to a "no-brainer" as we will find in the mortgage industry. Yes, it makes sense.

Sincerely,
Greg

Partners Mortgage
Roseville, CA
  • November 29 2012
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It may be possible depending on your credit score and the rate of your current mip.  The FHA requires that you save a minimum of 5% on your P&I payment plus MIP.  It's definitely worth taking a look at because the benefits to you are being locked in at the lower interest rate without having to do any appraisal or income verification and your payment should decrease significantly once the MIP is gone.  Either way, you'll save on your monthly payment because it's a requirement by the FHA.
 
Keep in mind that because you purchased in 2010, your mip rate will increase; however you may still be able to save with no out of pocket costs to you.

Bottom line, the only way to tell for sure is to speak directly with direct FHA lender.

  • November 29 2012
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Hi John, rates on FHA streamlines are in the low 3% range on 30 year fixed rate mortgages so there may be a benefit to refinancing.  Your principle, interest and mortgage insurance would have to be reduced by at least 5% to qualify for a streamline.  Also, FHA is tinkering with the idea of making MI permanent so you may want to take this into consideration and refi while the MI is still temporary.

Good luck!!
  • November 29 2012
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It could be beneficial. There are a few more factors to it that would affect the rate and therefore, the savings you would get. Other factors are the loan amount, credit score, etc. Talking with a lender would help you determine if it would be worth it for you. Feel free to contact me if you'd like to talk about your options.
  • November 29 2012
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