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Old 06-29-2010, 10:02 AM
 
Location: Casa Grande, AZ (May 08)
1,707 posts, read 4,320,007 times
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Hi there,

Ok, I remember reading something about the FHA streamline rules changing awhile back. I didnt work on getting the exact details at the time because the numbers didnt quite pan out for me anyway since Im at 5.75% now so when rates were only at 5.25 etc it wasnt quite enough to bother.

BUT, with the recent (and especially today's) drop back under 5% it may well be worth it for me to reconsider. I will be in the home for the long term, so payback times are not a factor really.

SO, my questions are, what were the changes? Are the Streamlines still allowed to roll the new MIP and closing costs into the loan (yes I understand this will mean a slightly higher rate)? Is it still no income and asset verification to allow for speedy processing?

I am current and have never been late in the two years I have had the loan.

Thank you in advance for any updated information.
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Old 06-29-2010, 10:36 AM
 
Location: Plano, Texas
1,673 posts, read 7,001,531 times
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Yes, you can roll the closing costs and new escrow into the new loan as long as your home will appraise for enough to allow it to be rolled into new mortgage.

Yes, you can still do it with no income or assets but the lender will verify you are employed.
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Old 06-29-2010, 11:05 AM
 
Location: Casa Grande, AZ (May 08)
1,707 posts, read 4,320,007 times
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Ok, so is that the difference now? I think in the past there was no appraisal, with the theory being that as long as you werent taking cash out, and the overall payment was LESS than the current payment, it was actually lowering risk for the FHA.

But now if you are trying to do a "no upfront cost" version, it requires a new appraisal?
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Old 06-29-2010, 11:47 AM
 
Location: Laguna Niguel, CA
768 posts, read 4,330,497 times
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The full details on the new requirements can be found at http://www.hud.gov/offices/adm/hudcl...es/09-32ml.doc

Some of the more important points to consider:

1. Loan must have a net tangible benefit of either:

• 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.

Those are explained in further detail within the link above.

2. Employment is verified & if funds are needed to close, they must be verified as coming from the borrowers own accounts.

3. Credit is checked and a qualifying score must be obtained (most lenders are requiring 640)

4. If you choose the no appraisal option then the new mortgage amount cannot exceed the current loans principal balance (this can include accrued, but not delinquent, interest), minus the UFMIP refund. The new UFMIP (currently 2.25%) can be added to that figure.

5. If you choose to do the streamline with an appraisal then like with the old guidelines, you can include closing costs & prepaids to establish the new escrow account, but cannot exceed 97.75% of the new appraised value. Keep in mind if you get an appraisal and it the value comes in less than what is owed, you cannot switch to the no appraisal streamline option and disregard the appraised value. From my records Casa Grande values in general have depreciated over the last 12 months, so this is definitely something to be aware of in your situation.

Majority of lenders are still reviewing income & debts to make sure the situation hasn't worsened, as they don't want to take on a loan where there is a likelihood of an early default. There are still lenders who aren't reviewing income & debts however.
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Old 06-29-2010, 11:50 AM
 
Location: Casa Grande, AZ (May 08)
1,707 posts, read 4,320,007 times
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Thanks Shane. So its like other things in the industry - i.e, the FEDS are only REQUIRING certain things, but lenders are free to add additional guidelines on top of those, and many are it sounds like.

Thanks. I ll think about it some more.
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Old 06-29-2010, 01:46 PM
 
Location: Plano, Texas
1,673 posts, read 7,001,531 times
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yes, lenders have many overlays to the FHA guidelines.
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Old 07-02-2010, 07:25 AM
 
Location: MID ATLANTIC
8,643 posts, read 22,799,829 times
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Also, be aware - there are pricing differences between the no appraisal and appraisal options. In my area, it's running 1/4 point higher to go the no appraisal route. On the 350K mortgage I just worked up, that was $875 vs. the $400 for the appraisal.

Other than equity being absent, the only other reason I would not recommend ordering an appraisal would be if the owner is in the middle of renovations (for example has a gutted bathroom). I haven't tried flipping from a full appraisal streamline to a no appraisal streamline.......if you let the cat out (property problems), will you be able to stuff the cat back in? (especially when the appraisal is logged w/ FHA). If rates hold, it's going to be interesting. A record number of homes with renovation issues have gone to the table in the past 2 years.
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