FHA announces changes to Streamline Refinancing for San Jose Homes
Author bio section
I am the author of this blog and also a top-producing Loan Officer and CEO of InstaMortgage Inc, the fastest-growing mortgage company in America. All the advice is based on my experience of helping thousands of homebuyers and homeowners. We are a mortgage company and will help you with all your mortgage needs. Unlike lead generation websites, we do not sell your information to multiple lenders or third-party companies.
In it’s announcement on Friday, FHA tightened the credit standards for it’s Streamline Refinancing Program. So if you currently have an FHA loan on a San Jose home and want to refinance into another FHA loan, you will be subjected to new parameters starting January 1, 2010. Below are the highlights per FHA mortgagee letter issued on 9/18/2009.
A.Seasoning
At the time of loan application, the borrower must have made at least 6 payments on the FHA-insured mortgage being refinanced.
B.Payment History
1)For mortgages with less than a 12 months payment history, the borrower must have made all mortgage payments within the month due.
2)For mortgages with a 12 months payment history or greater, the borrower must have:
a)Experienced no more than one 30 day late payment in the preceding 12 months,
AND
b)Made all mortgage payments within the month due for the three months prior to the date of loan application.
C.Net Tangible Benefit
The lender must determine that there is a net tangible benefit as a result of the streamline refinance transaction, with or without an appraisal. Net tangible benefit is defined as:
reduction in the total mortgage payment (principal, interest, taxes and insurances, homeowners association fees, ground rents, special assessments and all subordinate liens),
refinancing from an adjustable rate mortgage (ARM) to a fixed rate mortgage,
OR
reducing the term of the mortgage.
Reduction in Total Mortgage Payment: The new total mortgage payment is 5 percent lower than the total mortgage payment for the mortgage being refinanced.
D.Certifications and Verifications
When submitting the loan for insurance endorsement, the lender must include a signed and dated cover letter on their letterhead certifying that the borrower is employed and has income at the time of loan application.
If assets are needed to close, the lender must verify and document those assets.
E.Maximum Combined Loan to Value
If subordinate financing is remaining in place, the maximum combined loan-to-value ratio is 125 percent.
Also read my earlier post on Streamline refinance by clicking here
Related Posts
- 70Many home buyers find that an FHA home loan is the best way for them to obtain a mortgage. They are able to enjoy the benefits of homeownership without having to put down a large down payment and do not have to have a super high credit score. The FHA…
- 67On 10/21 FHA via it's mortgagee letter announced delay in FHA condominium changes. This is what the letter mentioned: Implementation of FHA new policy guidance for condominium project approval and condo unit financing will be delayed until December 7th 2009. The new guidance, to be issued within the next two…
- 67If you are planning to buy a Condo in San Jose or other parts of the Bay Area and planning to get an FHA loan keep reading. FHA has made some major changes to their condo guidelines and they go into effect as of Nov 2nd, 2009. Some of the…
- 62The Government said last week it would offer principal reductions for borrowers who are underwater (owe more than their homes are worth.) The FHA plan is targeted at investors who currently own these underwater mortgages (see Negative Equity Share Chart below - source American Core Logic). Under the plan, the…
- 60People who are retired or about to retire may have prepared all their lives to live a quiet life in their old age. However, with the high costs of living in general, this may be more difficult than they thought. In this case, people over 62 have the option of…
