The FHA, which stands for Federal Housing Administration, is a government sponsored home loan program. If you have an existing FHA loan, there are a few ways that you can refinance that loan to take advantage of today’s low rates.
- The first is a Regular FHA refinance. For this option, it doesn’t matter if you have an existing FHA loan or not. If you want to reduce your interest rate only, it is called a Rate Term Refinance. By doing a FHA Rate Term Refinance, homeowners can have a new loan up to 97.75% of the appraised value. So, for example, if your house appraises for $100,000, the maximum new loan could be $97,750.
- The second option is a Cash-Out Refinance, which allows you to go up to 85% of the appraised value. Rates are great, but you will need to use the new higher mortgage insurance rates.
- The third option is the Streamline FHA loan. Key Features of the Streamline Refinance Program are:
- No appraisal requirements
- No Income check
- No cost options
- FHA fees substantially slashed starting June 11th, 2012
To get a better idea of the differences between a Standard FHA Loan and the new Streamline Refinance Program, view the differences using the graph below based on a loan amount of $200,000 on a 30-year fixed mortgage.
With the Streamline Refinance Program, the Up Front Mortgage Insurance Premium is going from 1.75% to .01%, and the annual Mortgage Insurance Premium is going from 1.25% to .55%. This could provide immense savings for homeowners who currently have a FHA Loan was closed and funded before June 1st, 2009.
|Current Loan||Standard FHA||Streamline|
|Loan Amount||$ 200,000.00||$ 200,000.00||$ 200,000.00|
|Up Front Mortgage Insurance Premium||$||$ 3,500.00||$ 20.00|
|New Loan amount||$ 200,000.00||$ 203,500.00||$ 200,020.00|
|Loan program||30 year fixed||30 year fixed||30 year fixed|
|Monthly Principal and Interest||$1,135.58||$942.44||$926.32|
|Monthly mortgage Insurance||$ 150.00||$ 208.33||$ 91.67|
|Monthly payment including MI||$ 1,285.58||$ 1,150.77||$ 1,017.99|
|Savings||$ 134.80||$ 267.59|
How Can the Mortgage Guys Help?
If you’re interested in applying for the new Streamline FHA Loan rates, or are unsure about applying for the Streamline FHA Loan Program, don’t hesitate to give the Mortgage Guys in Atlanta, GA a call. We’ll sit down with you to determine what your options are and the best way to save you money and give you peace of mind.
Photo courtesy of Flickr.