FHA Streamline Refi??? (loan, interest rate, premium, credit check)

[Rhett_Butler]

I'd REALLY like to lower my payments here if possible. I'm already in a 6.0% fixed 30-year FHA loan, but I might be able to get it down to 5.0%......

What are the drawbacks? What is the catch?

They're saying no increase in principle, no out of pocket costs, no credit checks, no appraisals.... What am I missing?

[dad2jules]

No chance- you can have many of these features but not all together.

No increase in priinciple can't be done unless you bring money to table for UFMIP(1.75% of loan amount)
No out of pocket can be done but you will add to principle and need an appraisal.
Credit check is mandatory these days.
No appraisal can be done but your new loan amount can only = payoff - MIP refund + new UFMIP. This requires you to bring money.

Have you received a GFE for this yet? If not ask for one and also the initial fees worksheet.

[chet everett]

The "magic" that allows all the things in the OP's statement to be true is that the FHA's Streamline program does allow the lender to roll a "interest rate premium" into the loan. That premium pays for all the 'savings'. It is spelled out on the FHA/ HUD site -- http://www.hud.gov/offices/hsg/sfh/buying/streamli.cfm

Frankly it might not be a bad idea if you can get your APR dropped by a full point (or even less), and with a 6% fixed loan when there are lots of loans available on the happy side of 5.0% that is fully understandable...

Off course if you have the funds available (and the house will appraise out and meet equity standards) to do a regular refi you MIGHT be able to get something as low as 4.75%, and depending on how big a mortgage and how long you'd have to recoup the refi costs in a normal loan that might make more sense.

Be very careful. I have seen more than a few folks get duped into working wth a "drag my feet" lender who pretty clearly is waiting for the rates to hit some "magic" spot to maximiize their own profit, and that is a very irresponsible game to play -- ultimately it an result in the borrower getting nearly no rate reduction and the lender getting a huge premium.

[Lou82]

Just so you know you still have to be living in the home to qualify for the streamline refi since its FHA. And when you close on the refi the 1 year FHA occupancy rule goes back into effect. You will be required to live in the home for at least 1 year unless circumstances make it absolutely vital for you to move out.

Some people dont realize the occupancy part and attempt to do FHA refi's on home's they no longer occupy.