FHA Mortgage Guide

Anyone notice that bond yields are falling?

It used to be that 10-year Treasury bonds and 30-year mortgages had about the same interest rate because they were considered to have roughly the same level of risk. Given events on Wall Street I’m not sure how the two investments now match up, or how they will match up in the future, however with bond prices rising — and interest rates for bonds falling — it may mean that mortgage rates are also about to decline.

For FHA borrowers this raises a magic term: streamline refinance. Say it slowly. Savor it. If interest rates turn south you could save big bucks.

Here’s what HUD has to say about streamline refinancing:

*The mortgage to be refinanced must already be FHA insured.

*The mortgage to be refinanced should be current (not delinquent).

*The refinance is to result in a lowering of the borrower’s monthly principal and interest payments.

*No cash may be taken out on mortgages refinanced using the streamline refinance process.

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.

Lenders may offer streamline refinances and include the closing costs into the new mortgage amount. This can only be done if there is sufficient equity in the property, as determined by an appraisal. Streamline refinances can also be done without appraisals, but the new loan amount cannot exceed the original loan amount. Investment properties (properties in which the borrower does not reside in as his or her principal residence) may only be refinanced without an appraisal

Good stuff, huh?

Check out these FHA resources for more information

This entry was posted on Tuesday, August 21st, 2007 at 3:21 pm and is filed under FHA. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.