FHA Changes

Well I was out on vacation last week so I didn't blog for the first time in months. I wanted to get back to let you know about more FHA changes, some just happened some take place Jan 1 2010. FHA changes that took place Wed November 18th.
In order to streamline without an appraisal you must have made at least six payments on your FHA mortgage. You can't have any lates in the last 12 months.
If you were late prior to the last 12 months you may only have one 30 day late and been on time the last three months.

You also must have a net tangible benefit such as reducing your monthly payment by at least 5%. You can also refinance if you are going from an ARM to a fixed rate or going from a 30 year to a 15 year term on the mortgage.

The biggest change is how the new loan amount is calculated. It changed from old original loan amount with MIP as the base to current loan amount. This is a HUGE change. It's also the outstanding principal balance minus the refund of the MIP.

This means that clients who want a good interest rate will suddenly bring thousands of dollars more to the table at settlement, which means that the time needed to recoup the money will be longer or for some people it means they simply won't be able to save money with a rate reduction. In this economy it might prove meaningful to save even $150 per month and now this has potentially been removed as an option.

There is a way around some of the new hurdles erected by the government.What I recommend is taking a higher rate and working with me to credit some of the fees back to you so you don't have to bring so much extra money to the table. It's not a perfect plan but if it saves you a large amount versus nothing it still make sense. Don't be discouraged, talk to me and ask before the rates begin to rise. Say a rate of 5% pays me 2k in gross fees. There isn't much I can credit to you. But if we raise the rate a bit and we make 5k in gross fees than we can probably credit you the 3k in fees to help you save something rather than nothing. So instead of 5% you get 5.25%. It may still be better than the 6.25% you currently have. Don't be discouraged, lets get creative and form a plan of action to save you money NOW before it's too late. Please let me know if you have any questions.

Thanks,
Brent