VA Loan FHA Streamline Miami
VA Loan FHA Streamline Miami. An FHA loan is a mortgage insured by the Federal Housing Administration. The FHA program was created in response to the rash of foreclosures and defaults that happened in 1930s; to provide mortgage lenders with adequate insurance; and to help stimulate the housing market by making loans accessible and affordable for people with less than stellar credit or a low down payment. The FHA is an agency within the U.S. Department of Housing and Urban Development. Borrowers with FHA loans pay for mortgage insurance, which protects the lender from a loss if the borrower defaults on the loan. Because of that insurance, lenders can and do offer FHA loans at attractive interest rates and with less stringent and more flexible qualification requirements.
Nowadays, FHA loans are very popular, especially with first-time home buyers because the requirements are less strict than conventional loans. Borrowers can qualify for an FHA loan with a down payment as little as 3.5% and a credit score of 580 or higher. The borrower’s credit score can be between 500 – 579 if a 10% down payment is made. It’s important to remember though, that the lower the credit score, the higher the interest borrowers will receive.
For those who have a VA loan FHA streamline Miami and want to send a child to college, consolidating bills, taking a much needed vacation, making home improvements, take advantage of lower interest rates, get out of an adjustable rate mortgage (ARM) or graduated payment mortgage (GPM). Both the FHA and VA offer streamline refinancing for home mortgages call FHA Streamline. VA Loan FHA Streamline Miami
This refinancing option is considered streamlined because it allows you to reduce the interest rate on your current home loan quickly and oftentimes without an appraisal.
FHA Streamlined Refinance also cuts down on the amount of paperwork that must be completed by your lender saving you valuable time and money. This way you speed up the home refinancing process. By reusing the original loan’s paperwork, the process to refinance a home was reduced from a few months to only a few weeks. FHA streamline refinancing has become more popular because reuse of the original home’s appraisal may be the only way someone underwater on the property can refinance it at all.
This type of refinancing option reduces your monthly expenses by lowering your payments but there is no option to receive cash back. This works well for people who are in good financial standing with no significant debt because it allows you a little extra money each month that can be put to good use elsewhere.
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. FHA does not allow lenders to include closing costs in the new mortgage amount of a streamline refinance. Investment properties (properties which the borrower does not occupy as his or her principal residence) may only be refinanced without an appraisal.
The FHA Streamline Refinance program’s defining characteristic is that it does not require a home appraisal, like we said before.
Instead, the VA Loan FHA Streamline Miami, will allow you to use your original purchase price as your home’s current value, regardless of what your home is actually worth today. In this way, with its FHA Streamline Refinance program, the FHA does not care if you are underwater on your mortgage. Rather, the program encourages underwater mortgages. Even if you owe twice what your home is now worth, the FHA will refinance your home without added cost or penalty for having very little equity. Homeowners in places like Florida, California, Arizona and Georgia have benefitted greatly.
Beyond this “no appraisal” feature, however, the FHA Streamline Refinance behaves very much like any other loan product. It’s available as a fixed rate or adjustable mortgage; it comes as a 15- or 30-year term; and there’s no FHA prepayment penalty to worry about. Another big plus is that FHA mortgage rates are the same in the FHA Streamline Refinance as with a “regular” FHA loans.
While the hype surrounding the FHA streamline refinance program makes it sound fabulous, the reality is that mortgage lenders often put what are called “overlays” on FHA guidelines. In other words, while the FHA says you can basically refinance your underwater home even if you have bad credit and are unemployed, most lenders require you to meet a certain level of standards. That said, if you have an FHA loan and can qualify for an FHA streamline refinance, it can be a great deal. Just make sure you compare your options for other types of mortgage refinance.
VA Loan FHA Streamline Miami Requirements
- The mortgage to be refinanced must already be FHA insured.
- The mortgage to be refinanced must be current (not delinquent), with payments made on-time, for the past 12 months.
- Your FICO credit score has to be at least 620 or higher. Some lenders require a credit score of 640 or 680 on an FHA loan.
- You cannot have refinanced within the past 210 days. The FHA requires that borrowers make 6 mortgage payments on their current FHA-insured loan, and that 210 days pass from the most recent closing date, in order to be eligible for a streamline refinance again.
- The refinance results in a net tangible benefit to the borrower. The definition of net tangible benefit varies based on the type of loan being refinanced, and the interest rate and/or term of the new loan.
- Cash in excess of $500 may not be taken out on mortgages refinanced using the streamline refinance process.
In addition to various individual mortgage lender requirements, you need to meet the FHA “net tangible benefit” requirement.
This says that refinancing will either help you avoid future mortgage rate increases (refinancing from an adjustable rate mortgage to a fixed-rate mortgage works for this) or will reduce your total monthly payment including principal, interest, and mortgage insurance by at least 5%. The interest rate doesn’t have to drop by 5% just your payment. Another allowable Net Tangible Benefit is to refinance from an adjusting ARM into a fixed rate loan. Taking “cash out” to pay bills is not an allowable Net Tangible Benefit. VA Loan FHA Streamline Miami
That can be a catch for many homeowners, because even though you have been paying mortgage insurance premiums with an FHA loan, you need to continue paying them with a refinance. Depending on when you took out your current mortgage, those mortgage insurance premiums could be higher on your new loan and erase any payment reduction achieved with a lower interest rate.
FHA Streamline Eligibility
The FHA streamline is available to homeowners who currently have an FHA loan. In addition, the borrower must have a good payment history. Lenders typically do not need an appraisal to approve an FHA loan. Homes that have lost value and are now underwater are eligible. Borrowers must receive a benefit from refinancing. Lenders will approve an FHA loan when the payment will drop by at least 5%. This is a built-in protection for refinance applicants so they don’t complete an unnecessary refinance.
What is The FHA Streamline Process?
The FHA streamline loan is the easiest loan you will ever apply for. There is no income and no appraisal required to refinance your current FHA loan. The only thing we care for is that you have made your mortgage payments on-time for the last 12 months.
VA Loan FHA Streamline Miami Guidelines
- Employment verification is not required with an FHA Streamline Refinance.
- Income verification is not required with an FHA Streamline Refinance.
- Credit score verification is not required with an FHA Streamline Refinance.
There’s no need for a home appraisal, either, so when you put it all together, you can be out of work, or without income, carry a terrible credit rating, or have no home equity. Yet, you can still be approved for an FHA Streamline Refinance.
That’s not as crazy as it sounds, by the way. To understand why the FHA Streamline Refinance is a smart program for the FHA, we have to remember that the FHA’s chief role is to insure mortgages not “make” them. It’s in the FHA’s best interest to help as many people as possible qualify for today’s low mortgage rates. Lower mortgage rates means lower monthly payments which, in theory, leads to fewer loan defaults. This is good for homeowners that want lower mortgage rates and for the FHA. That is why lenders may still have being asking for some credit requirements. VA Loan FHA Streamline Miami
What are The Lowest FHA Rates you Can Get?
It all depends on your short and long term goals. For instance, you have the ability to lock the lowest FHA rates available with closing costs or with zero closing costs. The choice is yours to make once you have all the options that could save you thousands. The Big mistake that homeowners make is not shopping around and thinking that their current mortgage company is the only one that can FHA streamline refinance their loan. VA Loan FHA Streamline Miami
This is far from the truth. The fact is any mortgage company can refinance your FHA loan. The advantage of using a mortgage broker is not only getting wholesale FHA rates that are significantly lower that the banks or a direct lender but most importantly the ability to be presented with multiple FHA streamline scenarios based on your mortgage needs.
FHA Mortgage Insurance
How much you’ll pay in mortgage insurance depends on when you closed on your current mortgage. As of June 11, 2012, the FHA offers reduced upfront mortgage insurance premiums to borrowers who took out their current mortgage prior to June 1, 2009. Those borrowers must pay 0.01% of the loan amount.
If you took out your current loan on or after June 1, 2009, you’ll pay a higher upfront mortgage insurance premium of 1.75%. That’s a whopping difference from $10 to $1,750 on a $100,000 mortgage. The upfront mortgage insurance premium can be added to your loan balance. As you already know if you have an FHA loan; you have to pay both an upfront mortgage insurance premium and an annual mortgage insurance premium. However, the annual mortgage insurance premium is eliminated if your loan-to-value (LTV) is 78% or less.
If you are refinancing a loan taken out before June 1, 2009, your annual mortgage insurance premium will be 0.55%.
If you are refinancing an FHA loan taken out more recently, you will need to pay 1.25% of the loan amount. The annual mortgage insurance premium on a $100,000 mortgage would be $550 at the lower rate and $1,250 at the higher rate. These premiums you pay on a monthly basis, so on a $100,000 loan you would pay $58 more per month at the higher mortgage insurance rate.
For FHA-backed homeowners refinancing within the 3 years of their existing loan’s start date, the FHA provides a refund on your previously-paid upfront Annual Mortgage Insurance Premiums (MIP). The size of the refund diminishes as the 3-year window elapses. For example, a homeowner who refinances an FHA mortgages after 11 months can have a 60% refund on his initial FHA UFMIP. 30 days later, the refund drops to 58%. After another 30 days, it drops to 56%, and so on. This is why is rarely a good idea to “wait to refinance” with the FHA. With the FHA Streamline Refinance program, the sooner you refinance, the bigger your refund, and the lower your total loan size. This lowers the monthly payment and preserves the home equity two huge positives. VA Loan FHA Streamline Miami
Pros and Cons of a VA Loan FHA Streamline Miami
Clearly, homeowners with an FHA loan taken out before June 1, 2009 benefit the most from the FHA streamline refinance program. But even those with more recent loans should compare their current monthly payments with their payments under a refinance.
- No appraisal is required.
- Underwater homes are eligible.
- Very low rates..
- No income documentation required (paystubs, W2s, etc).
- You can have a refund of part of your original upfront mortgage insurance.
- FHA loans closed before June 1, 2009 may qualify for reduced mortgage insurance premiums of 0.01% upfront and 0.55% monthly
- Faster closing times than traditional refinances.
- Mortgage Insurance.
When you take out a new FHA loan, you must pay upfront mortgage insurance again. And if your loan-to-value is higher than 78%, you must pay annual mortgage insurance premiums. The mortgage insurance increases your loan balance and your monthly payments. If you took out your loan after June 1, 2009, your mortgage insurance premiums will be higher on your new loan.
- Closing Costs.
The FHA says borrowers cannot finance their closing costs into their loan balance. Closing costs vary widely by location; The average closing cost is approximately 3% of the loan amount, or $3,000 on a $100,000 loan. Most lenders allow you to wrap closing costs into your loan balance for a conventional loan refinance. Your options on an FHA streamline refinance, however, are to pay your closing costs with cash or to find a lender who will do a “zero cost refinance”. While “zero cost” sounds like a great option, what this actually means is that you must pay a slightly higher interest rate over the life of your loan to reimburse the lender-paid closing costs.
Closing costs of an VA loan FHA streamline Miami are generally the same as with other mortgages. Except that there is no appraisal fee if you opt not to get an appraisal. Generally you can expect to pay between $1000 and $5000 in VA loan FHA streamline Miami closing costs; but this amount could be higher or lower depending on your loan amount and other factors. You may also need to pay a portion of property taxes and insurance at closing. For instance, if your jurisdiction’s property taxes are due in the next few months; your lender will require you pay that tax installment. Keep in mind, however, that you will receive a check from your current lender for taxes and insurance you paid to them but they have not disbursed it yet. VA Loan FHA Streamline Miami
Lender Credits for Closing Costs
Often, the lender can give you a slightly higher interest rate. And also use the excess profit from the loan to pay for some or all of your closing costs. This eliminates the need for out-of-pockets expense. If you are short on cash, ask your lender if this is a possibility in your case. If you have equity in your home, it may be possible to obtain an appraisal; and wrap the closing costs into the new loan amount. See the next section on Appraisals. VA Loan FHA Streamline Miami
VA Loan FHA Streamline Miami Document Checklist
Here is a list of documents your lender may need to process your VA loan FHA streamline Miami:
- Copy of the mortgage note from your current FHA loan; (this shows your current interest rate and whether the loan is an ARM or a fixed rate).
- Copy of a current mortgage statement.
- Final settlement statement (final HUD-1) or Deed of Trust that shows the FHA case number of your current loan.
- Contact name and number of your employer’s HR department; (most lenders need to verify you are currently working, even if they don’t verify your actual income).
- Two months of bank statements including all pages (even blank pages). The statements must show that you have enough money to pay any out of pocket costs associated with the loan.
- Homeowner’s insurance agent contact information. Your lender will need to obtain proof of current insurance on the home.
- Also remember to make your next month’s mortgage payment as soon as possible. This will allow the lender the obtain proof that your FHA mortgage is current. Your lender may require more or less than the items listed above.