FHA Streamline Refinance - My Personal Experience



My husband and I bought our home in 2008 using an FHA loan. We were lucky to get a home that we loved in a great neighborhood for a price that fit in our budget. Working at Quicken Loans, it's hard not to notice that mortgage rates have been at record lows and I began to wonder if we could refinance our house.Like a lot of people, I was concerned with our property value. I started using property value estimating sites to research what our home value might be. I was shocked to see that according to these sites, in just two years, our property value decreased $20,000. I assumed that there was no way we were going to be able to refinance. I continued to play around with our mortgage amortization calculator and dream of a time that we would be able to refinance.Suddenly, I came to my senses. Why was I making an assumption about our ability to refinance? Sure, I saw what a website said our home value would be, but why wasn't I personally talking to someone about our specific situation. I contacted a Home Loan Expert and before I knew it, I was in process and working toward closing our FHA streamline refinance.Because we are in an FHA loan, we were able to refinance without a new appraisal. Refinancing for us means that we've lowered our mortgage rate by nearly 2 points (or 2%) and we're saving $200/month which is huge for us! Even with our original mortgage rate, we were able to afford an extra payment each year which reduced our 30-year term by about 10 years. We refinanced to another 30-year FHA loan, but we still plan on making that extra payment each year. We're going to pay our loan off sooner and save $200/month. It's pretty amazing.It goes without saying that my experience throughout the loan process was excellent. My entire closing team made sure that the process went smoothly and we signed our closing papers at our favorite bar! That's right - Quicken Loans will meet you wherever you want for your closing. I really enjoyed sipping on an adult beverage while legally finalizing our savings.Every situation is unique, but if you're in an FHA loan and you have a mortgage rate over 4.5% and you haven't talked to a Home Loan Expert about your ability to refinance - what are you waiting for? The average FHA mortgage rates have hit a new record low - clocking in at an average of 4.19%. With the holiday season right around the corner, now is the perfect time to refinance your FHA loan.

Exactly What Mortgage Refinancing Means



Depending on how the prevailing interest rates in the markets behave at any given moment, you may hear quite a bit about home refinancing. Is it right for you? Answering that question takes a fair amount of calculation and consideration; however, you should understand exactly what a mortgage refinance means and why people do it before you jump to any decisions. Refinancing your home is not always the best alternative. What is Refinancing?


A home refinance is the same as a mortgage. Basically, you replace your existing mortgage with a new loan containing different terms. You have the same options available as you did at the time of application for your original mortgage loan and all the fees and closing costs remain roughly the same. You may even work with the same mortgage representative and title company. Why People Refinance People refinance for a variety of reasons. Among the most common reason is to get out of an adjustable rate mortgage (ARM) before the fixed rate expires. Once this occurs, the interest rate and monthly payment can jump around, making it close to impossible to create a successful household budget based on your mortgage expense. Lowering your interest rate is another primary reason to refinance your mortgage. Consumers buy homes in any interest rate environment. Perhaps a builder offers you a discount you cannot pass up or a house you've always loved in your neighborhood goes on the market. Not even industry experts turn down home ownership simply because interest rates are not at their 10-year low. Once rates drop, it's natural to want to trade in your old seven percent interest rate for a shiny new five percent rate. Sometimes, borrowers want to modify their payment amount. Your payment is a function of three things - interest rate, loan term and amount financed - so altering any combination can create a drastic change. In most cases, you want to decrease your payments and can do so by taking advantage of a lower interest rate, but extending your term back to 30 years when you've already paid seven years off your existing 30-year note will also do the trick. The mere fact that you've paid down your original principal balance may lower your payments, even without a substantial decrease in your interest rate. In some cases, you may find it beneficial to increase your payments in order to pay off your mortgage faster. Although a refinance is unnecessary to do so, making the conscious effort to send in double payments or an extra payment every six months is too difficult for some people. There's nothing wrong with that. Refinancing your 30-year mortgage into a 15-year mortgage increases your payments and cuts your term in half. Surprisingly, your new payments are not double the old amount because you've cut your overall interest cost by almost half. Is Refinancing Right for You? Now that you know the reasons why other people refinance, it's time to determine if you should jump on the bandwagon or keep your existing mortgage as it is. Ask yourself a few basic questions to start the decision-making process: How long will I be in my home? This is by far the most important thing to know before you begin a home refinance. If you have plans to move, or have a job that might require relocation, within the next five years, refinancing is probably not in your best interest. Refinance fees and closing costs can equal several thousand dollars. That means you'd need to find a vastly lower interest rate in order to recoup the cost of refinancing before you move. Keep in mind that if you took out a high-risk mortgage due to bad credit and have increased your credit score to qualify for standard interest rates, you stand a better chance of recouping your costs before moving. Can I afford my monthly mortgage payments? With a conventional mortgage, the answer to this question should be yes, unless you experience an unexpected loss of income or increased expenses because your payments do not change. If you have an ARM and the rate is about to expire, this is a different story. Some ARM contracts allow the interest rate to increase a full four percentage points during the first adjustment. Once this occurs, you may be unable to meet your obligations because of the higher payments. In this case, it makes sense to refinance your loan to a fixed-rate mortgage with payments you can afford. Remember that your mortgage representative is your greatest resource during the refinance process. An ethical lender will listen to your refinance goal and let you know if refinancing is right for you. Just be sure to work with a company and representative you trust. Allan Young is a freelance writer who writes about real estate and mortgage refinancing.


Related Articles -
Mortgage Refinancing, Real Estate, Mortgage Quote, Adjustable Rate Mortgage, Credit, Line of Credit, Home Equity,









Email this Article to a Friend!
Receive Articles like this one direct to your email box!Subscribe for free today!

Does It Pay For Me To Refinance My House



Have you ever asked the question, Does it pay for me to refinance my house? This question can be answered in many ways and this article will give you a handful of the answers. If you are thinking about refinancing your home, then you should read this article first.Does it pay for me to refinance my house so that I can add onto it?If this is the question you are asking, then the answer is probably yes. If you are going to refinance your home, use $10,000 to finish a basement, $20,000 to add on a room, or are going to do anything else that will add value to your home, then it will pay for you to refinance.You do need to remember that adding value to your home does not include landscaping, painting, new carpet, or anything cosmetic. You need to be adding square footage, putting on a new roof, finishing a basement, or updating an outdated heating or cooling system.Does it pay for me to refinance my house and pay off some high interest debts?This is another situation that will pay for you if you refinance your home. If you have over $10,000 in high interest debt, which would an interest over 15%, then you can borrow against your home to pay that debt off. This will pay for you in more than one way.First you will lose the high payment on that debt, and second the debt will be gone, which will improve your credit. This is a situation that is good to refinance in.Now you know a couple of situation where it will pay to refinance your home. If you are refinancing for a lower rate, but extending the terms, then you are not doing yourself any favors. There are other situations that it won't pay to refinance your home, but this is the most common one.The answer to the question, does it pay for me to refinance my house, is all up to your reasons for doing so. Make sure you are not putting yourself in a situation that you cannot afford and make sure you are not getting talked into something you don't want.

Does it Pay For Me to Refinance My House 3 Factors to Consider



Anybody who follows the financial news will notice times when mortgage interest rates seem to have shifted to a downward trend, meaning the average mortgage rate of today is likely lower than it was 6 months or a year ago.It is at these times that we wonder if we are missing out by not refinancing our home to take advantage of the better rates.The answer has to do with the simple concept of answering the question: will it cost me more than it saves me to refinance my house?Knowing When To RefinanceIf you are asking, "Does it pay for me to refinance my house?," you are going to need to do just a bit of math. Don't worry, it's pretty easy stuff.The easiest way to figure it out - the one that most people use - is a "roughly right" rule of thumb, but one which may yield a slightly incorrect result. That rule of thumb is to divide the reduction in the monthly mortgage payment (with the new loan) by the cost of the refinance.For example, if your new, post-refinance payments are $100 less than with your existing loan and your refinance cost you $2,000, then you would be better off refinancing if you plan to stay in your home for at least 20 months ($2,000 / 100 = 20).The trouble with this calculation is that it does not take into account the fact that your old and new loans will be paid down at different speeds.How To Calculate Your Refinance Breakeven: The 3 FactorsTo calculate whether you should refinance your home in a more accurate fashion, you need to take into account 3 factors:1. The difference in your monthly payments (old versus new loan)2. The cost of the new loan3. The difference between the outstanding loan balance after some period of months, such as 10 months (old versus new loan)Example CalculationSo, for example, let's say you want to know: "Would be the case that if I refinanced my mortgage now and stayed in my home for at least 10 months, how much would I have gained or lost by refinancing?"To figure out the answer, first determine the difference between your old loan (current loan) and new loan's monthly payments. Let's say it's $100. Then, figure out how much your loan would cost (be sure to include any closing costs such as points paid, title fees, etc.). Let's say that number is $2,000. Then, let's say that you use a mortgage calculator and find out that, with the new loan, your remaining loan balance would be $1,100 lower in 10 months than it would if you kept the current loan.In that case, the factors used to calculate your net savings/cost of the refinance in 10 months are:a. savings in monthly payments at month 10: ($100 savings x 10 months) = $1,000 in savingsb. cost of loan: $2,000c. lower balance at month 10: $1,100 lower loan balanceThe result is calculated as: ($1,000 + $1,100) - $2,000 = $100. Meaning, refinancing results in a savings of $100.So, we can see that in this case the breakeven came at around month 10 (which is the number we happened to try out), not month 20 as we had calculated when using the rule of thumb that ignores the difference in loan balances. hint: try different month periods to see how the answer changes.Use this simple calculation method to determine whether it pays for you to refinance your home.Of course, to make the calculation work, you will want to get some offers from at least 2-3 lenders so that you can have them determine your new monthly payments for a would-be loan that you can plug into the equation.

Deducting Points On Home Refinances



Any points that you pay in the refinancing of your residence are tax deductible over the length of the loan in question. The deduction is allowable only if the residence is your primary home and the new mortgage replaces a previous one and/or is used to improve the residence. To the extent that money is taken out to pay off credit cards and non-residence costs, the points may not be used as a tax deduction.Big Deductions By Refinancing TwiceIf you refinanced your primary residence twice during 2004, you may be in for a very nice surprise. A significant tax deduction can be created when you refinance twice in one year. If you refinance a mortgage, you accelerate the deductible amount of points from the first mortgage and may claim the points from the first mortgage all at once.As an example, assume that I refinanced my home in January 2004 and paid $3,000 in points. Interest rates continued to drop through 2004 and I then decided to refinance again in August. Because I paid off the original loan with the refinance, I am able to accelerate the value of the points of the January loan.So, what tax deductions have I created for my 2004 filing period? Initially, I am going to deduct a percentage of the points off of my latest refinance. The deduction will amount to the total amount of points paid divided by the total months of the loan. This will not be a big deduction, but every little bit helps.In addition to this amount, however, I will also deduct the full $3,000 in points that I paid on my January 2004 refinance! I am able to claim this deduction because I "accelerated" the deductibility of the points by paying of January mortgage with the August refinance.By refinancing twice, I get a lower interest rate and a healthy tax deduction. Ah, the value of owning a home.

Can My Mortgage Be Refinanced Under Obama and FHA's Revised Home Loan Modification Program



With foreclosure bugging many of us out there, the government had previously come up with the Loan Modification Plan through the President's office to assist those facing this dilemma of how to salvage their homes. This plan however faced heavy criticism from almost all quarters for the lengthy application process attached to it, as well as the low approval rates for those applying for them, in addition to other complications.The President and his office were quick to realize this issue, and rectified it by revising the Loan Modification Program to help struggling homeowner cope with foreclosure issues. The homeowners' bid to refinance home mortgage would in the future be approved more easily, and the program has also included newer features within it to help struggling homeowners further. Now even the unemployed are offered subsidies, and those who have borrowed more than the worth of their homes can also apply for subsidies to help them cope with refinancing.The revised program would increase the amount of payment to creditors that modify or refinance second mortgages. This incentive is deemed to directly help homeowners as previously banks were reluctant to write down second mortgages, and this dampened the government's efforts to help homeowners fight foreclosure. Thus if you fall into this category, your second mortgage can now be refinanced as more banks would come forward to accept your application! The applications would also fall into the FHA guarantee programs, giving the bankers more confidence to deal with those with bad credit scores. This means those with bad credit ratings can also apply for these loans successfully, and these packages serve as bad credit mortgage refinance deals!And if you are currently unemployed and struggling to find lenders to help refinancing efforts, the Treasury has agreed to help unemployed homeowners bring down their mortgage payments for up to 6 months while they find another job. Existing incentives have also been added for borrowers with loans that are FHA-guaranteed, and there is also the new benefit of relocation incentive payments for those that are forced to move out of their homes. For the lenders, the Treasury will offer further incentive when loan modifications are accomplished. The Troubled Asset Relief Program will fund these new additions for the Loan Modification Program (reportedly USD 700 billion), while another USD 14 billion will be set aside for FHA's guarantee programs.Homeowners should now find it a lot easier and appealing to refinance their homes with these incentives from the federal government as the public and the government combat foreclosure together.

Can I Still Refinance My Home;



Have you been reconsidering that you should have refinanced your home a while back? Did you not take advantage of rates when they were really low? Is it too late to reduce your monthly payment or interest rate on your mortgage?Start by looking at your credit report and cleaning up anything that is incorrect on your report. This will mean that you have the best possible score for refinancing. Your credit score will help you get the best interest rate available to you.Now contact a good mortgage broker and have them work for you. A good mortgage broker can review your situation and find the best alternatives for you. If the broker can find you some alternatives and reduce either your monthly payment or your interest rate then you could possibly save thousands of dollars.Reducing your interest rate will save you a lot of money over the course of the loan. By lowering your monthly payment you will see a savings each month that you can use to either reduce your debt or to build your emergency fund. Either of those options is going to benefit you in the long run.Reducing your debt should be your first priority but if you choose to build an emergency fund first then you are still working in the right direction. This is also a good time to adjust your budget or start budgeting if you have not done so in the past. This will help you no matter which you choose to do first. Even some of the best financial advisors don't agree which should be done first. The fact is both needs to be done so which one you do first does not matter.But if you have bad credit, then I would suggest you reduce your debt first because that will help your credit score the most. Then you can refinance and save more than you could before. Having an emergency fund is necessary because life will throw you many curveballs in the form of illness, job loss, car breakdowns or other things that you just don't have built into your budget. So take the time to do them before you have any problems.