Orange County FHA, VA & First Time Buyer Loan Information: June 2010

FHA Streamline Refinance | The Easiest Home Loan in Orange County

The FHA Streamline Refinance is by far the easiest loan program available for Orange County, CA home owners. Of course, the catch is, in order to take advantage of this program you must already have an FHA loan. This is strictly an FHA to FHA refinance program.

 

What Makes the FHA Streamline Refinance so Easy?

 

  • No Appraisal required (not kidding about this)
  • No income documentation required, meaning there are no "debt to income" calculations run on this program.
  • Very little paperwork (obvious just by the fact that there is no income documentation)
  • Little or no closing costs. Most lenders will waive their typical lender fees and issue a credit to the FHA borrower to cover escrow, title, recording and other closing costs.
While the Streamline program is very easy, there are a few requirements that must be met. Below are a few of the conditions that must be met.

  • The Orange County FHA home loan payment, including principle, interest, taxes, and insurance, must drop by a minimum of 5%. For example, if an FHA home owner in Placentia has a total PITI payment of $2,000 per month, then the new payment must be $1,900 or less.
  • The FHA home loan borrower must currently have a job. This will be verified. Debt to income ratios are not calculated, but the Orange County FHA loan company must make sure the FHA borrower at least has a job.
  • Assets used to close need to be verified. Closing costs cannot be added to the new loan, unless an appraisal is being used to verify the property value. It is typically more beneficial for the FHA borrower to not finance closing costs into their loan over the next 30 years. Take a slightly higher rate and have the lender credit the closing costs. While 30 days interest can be financed into the loan (some lenders like to call this "skipping a payment", but the more appropriate description is to "finance a payment"), some money will still be needed to close to cover the new impound account for taxes and insurance. Even this is a "wash" since the old, or current, impound account will be refunded back to the borrower a few weeks after the close.
  • The FHA borrower cannot be late on their mortgage.
  • The FHA loan being refinanced must already have 6 payments made. In reality, 6 Mortgage Insurance payments must be received by FHA. Typically, the 6th Mortgage Insurance payment will not be received until about 30 days after the 6th payment is made.
The purpose of this program is to allow FHA borrowers to take advantage of low rates without needing to jump through the hoops they had to when they first bought their home. FHA makes sure borrowers are not taken advantage of by requiring the 5% payment drop, along with not allowing closing to be added to the loan if no appraisal is being used. With mortgage rates are current all time low's, there has not been a better time to do a Streamline Refinance in years. To meet the 5% requirement, an FHA borrower's current rate probably needs to be 5.5% or higher.

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

www.OCFHALoans.com

Contact us for your Orange County FHA Home 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


 

 


1 comment • Tim Storm, Orange County FHA and VA Expert • June 27 2010 09:14PM

Guidelines for FHA Streamline in Orange County, CA

Orange County homeowners with an FHA loan have been able to lower their interest rates by taking advantage of the FHA Streamline Refinance program. With mortgage rates near all times lows, there has never been a better time to at least research whether a FHA Streamline with help your financial position.

What is an FHA Streamline?

The borrower must currently have an FHA loan, because the Streamline program "Streamlines" the refinance process for people who already have been approved by FHA. The lower rate must provide a true benefit for the borrower. FHA guidelines require that the borrowers total PITI payment must drop by at least 5%. For example, if your total PITI (Principle, interest, taxes, and insurance) is 2,000 per month then the new payment must drop the payment to at least $1,900. While there are several factors that have an effect on this calculation, a rate drop of .5% at a minimum is typically needed to meet this threshold.

FHA updated several guidelines at the end of 2009 which were meant to protect FHA borrowers. The borrower must have had their loan for at least 6 months. Typically it will need to be a little longer, because FHA needs to have received at least the 6th Monthly Mortgage Insurance payment from the lender. So if you are making your payment 15 days after the due date, and it takes the lender two or three weeks to forward the MI to FHA, you may need to be in your loan for 7 months before having access to an FHA Streamline Refinance.

No Appraisal, No Credit, No Income

The FHA Streamline is fairly "painless" compared to the loan process when you bought your home. No appraisal is required, unless you are choosing to add closing costs to your loan. Most Streamlines are closed with all closing costs credited by the lender, so why go through the effort and expense of having an appraisal? While technically no credit report is required, most lenders require a minimum FICO score of 620, so a credit report will be run. Also, the lender will use the credit to verify the mortgage rating. Multiple 30 day late's are not acceptable. But don't worry about collection accounts or other items on the credit report, because they will not be on the loan application and are not used in the underwriting process. Also, debt to income ratios are not calculated. No tax returns, W2's, or paystub's. The new lender will need to verify that you "have a job", but will not review the income.

The First Step for Orange County FHA Loan Borrowers

The first step for current Orange County FHA borrowers is to find a local Orange County FHA Expert who can help them determine whether a Streamline Refinance makes sense. Even though all closing costs are credited by the lender, there are other things to consider. The UpFront Mortgage Insurance Premium will be adjusted up, which does factor into the "breakeven analysis". Also, how long will you remain in the home? Maybe a 5 year adjustable rate mortgage with a lower rate will provide more benefit. Finding an Orange County Loan Officer you can trust will help you make an informed decision.

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 VA 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


1 comment • Tim Storm, Orange County FHA and VA Expert • June 13 2010 12:20PM