Hi all,
I’m coming up on the end of my rehab project. I purchased a 4 family house which I live in with an FHA 203K loan. I do qualify to for the streamline refinancing option. Currently my mortgage rate is 6.5%. My house should appraise to show 20% equity. If it doesn’t, I’d be able to pay down the note so that it does. Am I better off going with the streamline or do I have other options? Any help will be appreciated.
JP
JF,
How long have you had the property. If it is less than a year than FHA will only allow you to use the inital after repair value.
However when it comes to FHA 20% does not matter. You have MIP no matter what until you get to 78% of your inital loan amount or 5 years whichever is longer.
These rules do not apply to the 15 year FHA loan. In that case you would not have MIP if you are at 90% LTV or better.
Christopher,
Thanks for the reply. I’ve owned the house for 10 months. I received an offer from a bank to do the FHA Streamline Refi. That would only reduce my mortgage payment by $75/mo. I did see a 20 year mortgage for an owner occupied 4 unit by a local credit union. It would keep my payment the same as it is now but would be paid off 10 years earlier.
JP
What are the credit unions closing costs for their refi? When I did the FHA Streamline refi for my owner-occupied duplex, there were no closing costs, PLUS I dropped my interest rate a full percentage point. For me personally, reducing my monthly payment was/is more important than paying off principal faster, because I don’t plan on keeping the house that long. I guess your decision depends somewhat on your personal financial goals…
Also remember with the Streamline they’re not going to run credit and may not even pull an appraisal (depending on the lender) whereas if you refi out of an FHA you’re going to have to jump through all those personal credit/appraisal hoops!
Jake,
They are most certainly going to look at credit even with a streamline. You have to have a 620 to get a streamline done these days. Also as of 12/09 FHA is drastically changing the FHA Streamline program. Income as well as credit will have to be reviewed.
JF,
You might want to wait until you have 12 months of seasoning because you will be able to use your appraised value instead of purchase price plus repairs.
Also, what is the rate difference between the 20 year and the 30 year. If they are close or the same then I would take the 30 year and pay it as a 20 year loan. Think of it like this.
You can always pay a 30 year like a 20 year, but you can’t pay a 20 year like a 30 year.
My bad- I do remember then pulling credit on my refi now that you mention it.
The streamline is pretty much dead after December. You are going to have to start showing income. The FHA streamline has been around forever and now it will soon be gone.
Hi everyone. I still don’t get it. Will somebody explain streamline in detail. I’m newbie. Hope your support will be prompt.