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Starting June 11, 2012 some FHA Streamline Refinance borrowers in California, Washington and Oregon will be eligible for reduced FHA Mortgage Insurance Premium – both UFMIP (Up front Mortgage Insurance Premium) and Annual MIP.
Launching its own version of HARP 2.0, HUD (Housing Urban Development) announced that these reduced FHA MIP would be available for homeowners who currently have an FHA loan “endorsed” before May 31, 2009. Note that FHA Loan endorsement date could be few days (or longer) after the loan closing date.
Why should I consider doing an FHA Streamline Refinance?
You will be able to qualify for a much better Fixed Interest Rate loan and get substantially reduced Mortgage Insurance Premium (read below) – all this without doing a new appraisal.
What Kind of Benefit One can get for UFMIP?
While the normal Up Front Mortgage Insurance Premium (UFMIP) is 1.75%, if your loan was endorsed before May 31, 2009 it’s only 0.01%. So if your loan amount is $400,000 your UFMIP would be only $40.
What Kind of Benefit One can get for Annual MIP?
While the normal FHA Annual Mortgage Insurance Premium differs by Loan Amount, LTV and Loan Term, for the loans endorsed before 5/31/2009, its a flat 55 basis points for all loan amounts. For example if your loan amount is $400,000, the annual MIP would be =400000*.55% = $2200. It needs to paid monthly $2200/12 = $183.33/month.
Is there a way I dont have to pay Annual Mortgage Insurance?
Yes – if your loan term is 15 years and LTV <78%, you pay no annual mortgage insurance on FHA Loans.
Will I get a UFMIP refund from my last loan?
UFMIP refunds are valid only for 3 years from your last loan. Since your loan was endorsed before May 31, 2009 it’s more than 3 years and hence you are not eligible for any UFMIP refund.
What if I am Underwater?
FHA Streamline Refinances do not require any new appraisal. The LTV (Loan to Property Value Ratio) is calculated based on your original purchase price (or last appraised value). So even if you are underwater, you would still qualify for this program with discounted Mortgage Insurance Premium.
What to do next?