Orange County home owners with an FHA loan are in for some great news! FHA Streamline Refinance interest rates are at or near all time lows. The FHA Streamline refinance allows current FHA borrowers to take advantage of low rates without having to go through the full loan process they did when they bought their home. Most significantly, there is no appraisal and no debt to income ratios calculated. (VA home loan interest rates are very low as well.)
No FHA Appraisal Required? Really?
Its kind of hard to believe, especially with how much Orange County home loan underwriting guidelines have tightened over the past few years. But yes, FHA does not require an appraisal for this program, as long as no closing costs are being financed into the loan. HUD, looking our for FHA borrowers, does not want it’s borrowers taken advantage of by adding several thousand in closing costs to the loan for what may only be a slight interest rate drop. FHA also requires the new payment be at least 5% less than the payment being refinanced. As an example, if Joe Jackson (great singer from the 80′s) has a $2,000 mortgage payment, which with FHA includes taxes, insurance, and mortgage insurance, then the new payment must be $1,900 or less. And while a $100 payment drop may not sound like huge savings, you have to remember, there is no appraisal and no closing costs. Other than taking some time to sign loan papers, it’s easy money.
To meet the 5% payment savings threshold, the interest drop typically needs to be at least .5%. FHA Streamline Refinance rates do vary depending on loan amount. In Orange County, FHA loan amounts over $417,000 are considered “Jumbo” and tend to carry a slightly higher rate. But at the moment, Orange County FHA borrowers with a current FHA interest rate over 5.375% should at least check into whether or not it makes sense to take advantage of this program before interest rates start increasing.
No Paystubs or Tax Returns? Really?
Really. The FHA lender does need to verify the borrower has a job, but no income verification is required. The only thing that could make this not worth it for some borrowers is the increase in the Upfront Mortgage Insurance Premium. FHA recently increased the UFMIP from 1.75% to 2.25%. There is a little more that goes into this calculation, but the net result will, in nearly every case, result in an increase in the Total FHA Loan because of the increased Up Front Mortgage Insurance Premium. This has very little effect on the payment (remember, the payment must decrease by at least 5% anyway), but could deter someone who thinks they will move from their home within the next few years. In some cases it may be possible for the FHA lender to issue a credit that will go towards to increased UFMIP.
The First Step for Orange County FHA Borrowers
The first step for Orange County FHA borrowers is to talk to an experienced local Orange County FHA lender. For the FHA lender to analyze your situation properly, he or she will need to know original loan amount, interest rate, property taxes, insurance, and current balance. Most of this information will be right on the monthly mortgage statement. Much of the information can be researched by the Orange County FHA lender once they know your address. A good lender should be able to prepare scenarios and even a quick video explaining and analyzing your FHA loan.
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.
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. Also, rates are very low for the Reverse Mortgage program.
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
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