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Despite recent changes to the program, the FHA Streamline Refinance program continues to be active in Orange County, CA. Interest rates have remained low as 2010 as gotten underway, allowing Orange County FHA borrowers who hadn’t taken advantage of low rates in 2009 to lock in a low rate now.

FHA Changes the Streamline Program Requirements

FHA Mortgagee Letter 2009-32 announced revised FHA Streamline guidelines, which had many lenders worried that the program would loose its feasibility for many FHA borrowers. However, the changes really just went back to how things had been back in 2003. Truth be told, the changes made the program less profitable for lenders. The changes went into effect on November 18, 2009.

This may get a little technical, but the change that effects the program the most is new formula for calculating the loan amount. The new formula for a Streamline with No Appraisal is:

• outstanding principal balance Minus the Upfront Mortgage Insurance Premium (UFMIP) Refund PLUS the new UFMIP

Essentially, this new formula means that no closing costs can be added to the loan. The formula used prior to November 18, 2009 actually allowed the new loan amount to increase up to the original loan amount, which included the full original UFMIP. While this did make it easier for an FHA borrower to get a low interest rate, it also added thousands of dollars to their loan amount.  HUD tightened the rules partly to rein in “churners”, or lenders who kept refinancing the same people with minimal interest rate drops while increasing the loan amount every time. Now, the only time a Streamline Refinance makes sense is when interest rates truly drop. But even a .5% rate drop can make sense when no fees are charged.

The FHA Streamline Process is Easy

• No appraisal or termite inspections required.
• Qualifying is much easier than on a purchase transaction.  Although the lender does need to verify the borrower is employed and has income, the lender will not be calculate debt to income ratios.

Orange County Mortgage Interest Rates Have Are Low – Now is a Great Time To Check on a Streamline Refi

Currently, Orange County mortgage interest rates are low. Even just a .5% rate drop can lower a payment in a $300,000 FHA loan by nearly $100 per month. Another thing to consider are recent changes to the FHA loan program effecting the Up Front Mortgage Insurance Premium. Currently, the UFMIP is calculated using 1.5%. On a $300,000 base FHA loan, the UFMIP would be $4,500, resulting in a full FHA loan amount of $304,500. After April 12, 2010, the new UFMIP for a Streamline Refi will be 2.25%. This means that the UFMIP on a $300,000 loan would be $6,750, resulting in a total loan amount of $306,750.

FHA borrowers should check first with a local Orange County FHA loan officer who can quickly prepare scenarios and provide guidance as to whether it makes sense or is possible to lower your interest rate.

Authored by Tim Storm, an Orange County, CA Loan Officer – Please contact my office at Trust One Mortgage for more information about an Orange County, CA home loan.  877-786-4243 x 7.

www.OCFHALoans.com

Contact us for your Orange County FHA Mortgage:

Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

*Trust One Mortgage Corporation is licensed and supervised by the California Department of Real Estate (“DRE”), License # 01087829