On January 1, 2010, would-be borrowers will get a rude awakening from FHA. The agency’s streamline refinance will no longer be the easy transaction it is today. Today, the biggest advantage of FHA streamline refinances is that they don’t require an appraisal or credit qualifying. So even if your home’s value has tanked and you have bad credit, you have been able to refinance easily into a better FHA loan. That opportunity is about to go away.
Until recently, FHA’s objective always was to help its homeowners lower payments any time. Because FHA insured the mortgage it didn’t care if your credit imploded or if your home’s neighborhood was blighted with foreclosures and fraternity houses. By helping homeowners to lower their monthly mortgage payments, the FHA was also lowering its overall credit risk.
That’s about to change.
Starting January 1st of next year, FHA will start to turn down streamline refinance applications on the basis of employment, income, assets, and appraised value. You can be sure a lot of today’s FHA borrowers will be wishing they acted sooner. So here’s the deal: If you’ve got an FHA mortgage–just for fits and giggles–check available streamline refinance rates against what you’re currently paying. If you can save money, pull the trigger on a refi ASAP–those with bad credit may not get the opportunity again soon.
- |
- |
-
(5 votes, average: 4.8 out of 5)
Loading ...
Do you have to have an FHA loan to refinance with FHA?
You do not have to have an FHA mortgage to refinance. If you have a bad credit or sub-prime home loan, an FHA refinance can save you a lot of money. But guidelines are tightening up every day, so sooner is better than later unless you have a recent bankruptcy or foreclosure on your record. FHA streamline refinances are limited to those who currently have an FHA loan. The premise is that since FHA is already on the hook for your loan it makes sense for it to approve lowering your rate regardless of your financial situation. But you need to act fast.