- No appraisal is required on FHA streamline-without-appraisal program
- No income documentation is needed
- No asset documentation is needed
- No credit score required, only a “mortgage rating”
- Full income and asset documentation are required
- Full FHA appraisal is required
- Home must be a primary residence
- Low-mid FICO score of 580 or higher
- Must have lived in the property for the last 12 months
- Repair gutters and downspouts
- Repair/upgrade of existing HVAC systems
- Minor repairs of plumbing and electrical systems
- Minor repairs of existing flooring
- Minor remodeling that does not involve structural repairs
- Exterior and interior painting
- New appliances – which may include free-standing ranges, refrigerators, washers/dryers, dishwashers and microwaves but may not exceed $2,000
- Improvements for accessibility for people with disabilities
- Your current loan must be a non-FHA Adjustable Rate Mortgage.
- You must show a sustained history of employment.
- You need sufficient income to make the new mortgage payment.
- You need to show a history of on-time mortgage payments “prior” to the borrower’s ARM loan resetting to the higher rate.
- The Adjustable interest rate must have either reset or be scheduled to reset between June 2005 and December 2009.
- Mortgage late payments are allowed after the reset date if they are directly related to your higher loan payment. In addition, if you are in a mortgage payment plan because of late payments and there is sufficient equity in the home, the late payment amounts can be rolled into the new loan.
- Second mortgages are possible under certain specific conditions.
- A minimum of 3% cash or equity in the home.
- What are the general terms such as when does the ARM payment adjust, how will the new rate be figured, what is the maximum amount the payment could rise and minimum that it could fall?
- What is the margin?
- What index will the loan be tied to?
- How long do you plan on living in the property?
- Is there a convertibility option to convert to a fixed rate at some point?
- FHA loan applications were up 113.6 percent from a year ago in October, while applications for conventional loans were down 49.7 percent.
- FHA loan refinancings from conventional loans to FHA-insured loans were up 144.3 percent from a year ago.
- FHA loans accounted for about one in three mortgage applications in the month of October.
- Since the MBA began surveying loan applications in January 1990, FHA loans have ranged from a low of 5.8 percent of total applications in August 2005, to a high of 43.8 percent in February 1990.
- No appraisal is required
- No income documentation is needed
- No asset documentation is needed
- Part-time income can be counted assuming that you have been receiving the income for at least two years without interruption and that it is anticipated to continue.
- Overtime and bonus income that has occurred for the past two years and that will probably continue can be counted.
- Retirement income
- Military income
- Veteran’s benefits
- Social Security income
- Child support
- Alimony
- Interest/dividend income
- Rental income
- Have a loan owned or guaranteed by Fannie Mae or Freddie Mac.
- Owe 90% or more than the home is worth.
- Be 90 days or more behind on payments.
- Demonstrate financial hardship.
- Not have filed bankruptcy.
- Presently occupy the home.
- Interest rate reduction (but not below 3%).
- Loan term extended from 30 to 40 years.
- Deferred principal.
- 70% of seniors who are able to make changes to their homes have made at least one modification to make it easier for them to get around
- 66% of seniors who made home modifications believe those improvements will allow them to live in their homes longer than they would have been able otherwise, most for another ten years or more
- The reasons most often cited by seniors who participated in the survey for not making home improvements were the inability to make the changes themselves (37%) and not being able to afford the modifications (37%)
- Levered doorknobs.
- Grab bars in bathrooms.
- Levered faucets in kitchen sinks.
- Handrails on both sides of stairwells and on front and rear steps.
- Grab bars in showers; removal of any door threshold.
- Movable shower heads for those who must sit.
- Portable shower seats.
- A bathroom with a bath/shower as well as a bedroom on the first floor.
- Widened doors to accommodate wheelchairs.
- Ramps for those using walkers and wheelchairs.
In the Media
Important $ Info
Credit Repair Secrets Revealed
Guaranteed Bad Credit Financing
30 Days to a Better Credit Score
Do-It-Yourself Loan Modification Kit
Mortgage Loan Tips: Get The Best Deal
We Contribute To
Search This Site
Arizona FHA Mortgage Refinance Options: Which Ones Are Real?
FHA Hope for Homeowners, FHA Secure, FHA Streamline, FHA 95% Cash-out, FHA 203k Streamline, FHA Short Refinance… these are all “real” options for people who are currently in an FHA loan and looking for FHA refinancing options.
Supposedly.
Some are more real than others.
Let’s start with the “most real” FHA refinance programs and identify who can benefit from them.
FHA Streamline Refinance Program
If you are currently in an FHA loan and have noticed the recent drop in interest rates and just want to lower your monthly payment as a result of getting a lower interest rate - this is the program for you. The FHA streamline program is designed to allow FHA borrowers to take advantage of lower interest rates without having to completely re-qualify for a new loan.
Highlights of the FHA Streamline program include:
The FHA streamline refinance program is by far the most popular with FHA borrowers when interest rates drop - because it allows them to lower their interest rates with minimal hassle and without having to completely re-qualify for a new loan.
FHA 95% Cash Out Refinance Program
The FHA 95% cash out refinance program is for homeowners who are currently in an FHA loan and want to convert some of the equity in their home into cash for any reason. In mortgage-guy-slang, the process of converting your equity into cash is called “Cash-Out” and it could include paying off credit cards, cars, other miscellaneous debt or simply getting a check at closing.
Some (not all) of the guidelines of the FHA 95% cash out refinance include:
As home equity was rising in past years, the FHA 95% cash out loan was very popular - but going forward, I think it will be more common to see people participate in the FHA Streamline program when refinancing due to declining home values.
FHA 203K Streamline Refinance Program
The FHA 203k Streamline program has gained popularity recently due to the number of foreclosed homes that are being purchased that are in need of repair. The FHA 203k streamline program can be utilized both as a FHA refinancing option as well as a FHA new home purchase option.
The FHA 203k Streamline is a modification of the standard Section 203k loan in that it only allows limited repairs costing at least $5,000 but not greater than $35,000. The total mortgage amount will allow for acquisition of the property and up to $35,000 in the loan proceeds to be applied toward repair or rehab of the property.
Some of the most common repairs done under the FHA 203k Streamline program include:
In addition to the FHA 203k streamline program, there is a FHA 203k standard program — which will allow more than $35,000 to be used in repairs but requires more “major” work.
FHA Secure Refinance Program
The FHA Secure mortgage program is where the FHA refinance programs start becoming a little less “real”.
That doesn’t mean that they don’t exist — it just means that many people who try to qualify for this program end up with something different than an FHA secure loan.
The FHA Secure program was announced by President Bush in August of 2007 and according to estimates at the time, hundreds of thousands of families would benefit from the FHA Secure program.
Recently, HUD Secretary Steve Preston recently went on the record to say that FHA has helped more than 325,000 mortgage borrowers refinance during the current crisis. While that may sound good, the truth is something different: Yes, there have been hundreds of thousands of FHA refinances. However, only about 1% of these FHA refinances were with borrowers who had already defaulted.
That would indicate that FHA Secure has only helped a few thousand people, not hundreds of thousands of them.
The FHA Secure program guidelines state that in order to be eligible for the FHA Secure program, you must meet the following criteria:
In my experience, every single person who has inquired of us since this program launch about the FHA Secure program has not ended up with an FHA Secure loan.
FHA Hope for Homeowners Refinance Program
The FHA Hope for Homeowners refinance program was launched by HUD in October of 2008 and is designed to refinance mortgages for eligible borrowers who are having difficulty making their payments, but, after a write-down in principal, can afford a new loan insured by FHA.
Is the FHA Hope for Homeowners program “real”? As we have said before “we think so…” but it has been our experience that people who are interested in the FHA Hope for Homeowners program end up doing an FHA Short Refinance or a Loan Modification with their current lender.
And the current numbers seem to agree with our experience — there have been fewer than 100 applications NATIONWIDE since the programs inception.
FHA Short Refinance
I saved the FHA Short Refinance for last because it isn’t “really” an FHA program. The concept behind the FHA Short Refinance is that you get your existing lender to write down your current loan balance to 95% of your current market value and accept a short payoff — much like a short sale except for the fact that you get to stay in the home and end up with an FHA loan.
From Arizona Short Refinance expert Paul Dunn:
An FHA Short Refinance is when a home owner refinances a loan where they owe more on their mortgage than their current mortgage is worth. FHA Short Refinance applicants are upside down on their equity, and so they need an FHA Short Refinance. The only way to refinance the home for any reason, is if the current lender takes a “short pay” on the amount owed and writes it off as a loss, thus the FHA Short Refinance. It is basically the same as a short sale with the exception that the home owner keeps their home.
And what happens if the FHA short refinance doesn’t work? According to Paul:
An FHA Short Refinance is the goal for our work, but it does not work in every situation. In the case where an FHA Short Refinance does not work, you still may be able to negotiate a loan modification with your current lender to improve the terms on your existing mortgage. You may also elect to put your home up for a “short sale” and if you do we can provide you with an excellent Realtor referral in your area who specializes in this type of transaction. If you elect a short sale, it is important to work with a Realtor experienced in the short sale process.
We are very lucky to have one of the mortgage industry’s leading experts on FHA Short Refinances living right here in Arizona. Paul has been kind enough to teach us a thing or two about getting these FHA Short Refinances done. Thanks Paul!
In Summary
The FHA Streamline, FHA 95% cash out and FHA 203K Streamline programs are very “real”. Most of the people that we talk to who are interested in one of these options end up with one.
The FHA Secure, FHA Hope for Homeowners and programs are less “real”. This doesn’t mean that they don’t exist — It just has been my experience that most people who are searching for these as a solution end up with either a loan modification from their current lender or attempting to do an FHA Short Refinance or just walk away from their current home.
Considering An Adjustable Rate Mortgage? 5 Questions To Ask.
In the last couple of years, adjustable rate mortgages have become less popular - but there are times when financing your house with an adjustable rate mortgage can make sense.
As a very general rule of thumb, if you can save about 2.5% in the interest rate by choosing an ARM and are planning on being in the property for less than 4 or 5 years, it may make sense to choose an adjustable rate.
Remember — there are a lot of variables when choosing the right loan, so don’t only go by the general rule of thumb! I can think of (at least) 5 questions to ask if you are thinking of getting an adjustable rate mortgage.
5 Questions To Ask If You Are Considering An Adjustable Rate Mortgage
If you ask your loan officer these 5 questions, it usually will become clear as he explains the answers to each whether an adjustable rate mortgage loan is right for your situation. If you don’t know what you are getting into and end up with an adjustable rate mortgage that is not right for your situation - you will end up in a situation where you need to “fix your broken ARM” at some point… and nobody likes a trip to the (financial) doctor!
Arizona FHA Loans - As Popular As Ever
Recently, we were speaking with a group of sales professionals who work for a local roofing company about the benefits of the FHA 203k loan program and how it can potentially help their clients.
After introductions, we started speaking about the FHA loan programs and which ones would be right for what types of situations and the sales manager interrupted us and said:
“Hey, guys — pay attention! I personally have an FHA loan on my house and this is not the first house that I have bought!”
Which got me to thinking: exactly how popular are FHA loans today?
If the data released today by the Mortgage Bankers Association is any indication, FHA loans are as popular as ever.
According to the release:
Are FHA loans popular?
Yes.
Even the sales managers at our local roofing companies know that!
FHA Streamline Refinancing: When Does It Make Sense?
Today it was announced by the Mortgage Bankers Association that approximately 1 in 3 mortgage applications today are seeking FHA or VA loans.
The trend of more and more people getting an FHA loan has been going on for quite some time, and as mortgage guidelines continue to tighten the FHA and VA mortgage programs are as popular as they have ever been.
With so many people getting FHA loans over the past year, it is probably safe to say that many of the people who have recently obtained an FHA loan are “first timers” to the FHA loan program — even if they have had other home loans in the past.
As a result of our post yesterday about the FHA Streamline program, we received the following question worded in a few different ways:
“When exactly does it make sense to refinance using the FHA Streamline program?”
To which my short answer was generally:
“If it puts you in a lower interest rate, lowers your monthly payment and the savings that you realize will pay for the costs in a reasonable amount of time — it is probably a good time to take advantage of it.
But make sure that the benefits outweigh the costs, because there are costs associated with the program and just because you can roll them into your loan doesn’t mean that they are not real.”
Some mortgage professionals are saying that based on the actions by the Fed this week, mortgage rates *should* continue to go lower in the future — but if you can currently get an FHA 30 year fixed rate loan in the mid to low 5% range, I recommend acting on it while you can.
FHA Streamline Program: No Appraisal Required
One of the benefits of the FHA loan program is that when interest rates dip, you can easily take advantage of lower interest rates without having to completely re-qualify for a new loan.
If you are currently in an FHA loan and your interest rate is over 6%, it currently makes financial sense to speak with your mortgage professional about the FHA Streamline program.
The FHA Streamline program is one of the few loan programs that are available where you can refinance and get a lower the interest rate on your home and:
The main requirements for the FHA Streamline program are that (1.) you have a good “mortgage rating” — meaning that you have made your monthly payments on time and (2.) that if you participate in the Streamline program, it will put you in a better financial situation (read: lower your interest rate).
When speaking with your mortgage professional, ask them about the FHA Streamline With No Appraisal program and what it takes to qualify for it.
You may be surprised at how easy it is to lower your interest rate and save money each month on your mortgage payment.
Arizona Mortgage Rates: The Trend Is Your Friend
Some time ago, I was a student in an advanced capital markets finance class in college. I seem to have forgotten many of the things I learned in that class (or at least “learned” enough to pass the test!) but one thing has stuck with me through the years.
“Don’t fight the trend. The trend is your friend.”
Today, it was announced that the Federal Reserve was committing $800 billion to hopefully unfreeze the capital markets. The announcement came as a surprise and stated that the Federal Reserve will purchase up to $100 billion in direct debt of Fannie Mae, Freddie Mac and the Federal Home Loan Banks and up to $500 billion of mortgage-backed securities backed by Fannie, Freddie and Ginnie Mae.
“This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally,” the Fed said.
This $800 billion is in addition to the $700 billion “bailout” that was announced by the Treasury in early October.
Look for interest rates to generally trend lower in the relatively near future. And no, I am not 100% certain of what exactly the future holds — but I *did* learn in class once that the trend is your friend!
Arizona Mortgage Rates For November 25, 2008
Phoenix Arizona Mortgage Rates November 24, 2008
Phoenix Arizona Mortgage Rates November 24, 2008
What Will Lenders Accept As Income?
If you are planning on getting a loan today, be ready to document and verify your income. In general, lenders are going to want to verify two years of history for all income sources - full-time or part-time. If you are self employed, you will need to show two years in the same business and provide federal income tax returns.
Here is a quick checklist of additional income sources that may be considered:
In general, when calculating income a good rule to remember is the 2/2/2 rule. If you are wondering if the underwriter is going to “count” it as income, you should have at least 2 W2 pay stubs or have tax returns for 2 years and expect any part-time/over-time to continue for at least 2 years.
Loan Modification: “Once In A Lifetime Opportunity”
The Federal Housing Finance Agency (FHFA) recently announced a loan modification program that it is calling the “FHFA Streamlined Loan Modification Program” and the plan goes into effect December 15, 2008.
To qualify for the FHFA Loan Modification Program, borrowers must:
Possible remedies under the FHFA Loan Modification Program include:
Note that principal reduction is not among the possible remedies.
Some interesting insights into the program according to Kathleen Pender at The San Francisco Chronicle:
Peter Schiff, president of Euro Pacific Capital, predicts that many homeowners who have little or no equity will stop paying their mortgage and then reduce their income to get the biggest payment cut possible. They could stop working overtime or, if two spouses work, one could quit. After the modification, they could try to boost their income again.
“This is a once-in-a-lifetime opportunity,” Schiff says. “People are going to feel like complete morons if they don’t participate. The people getting punished are the ones who never made an irresponsible decision to buy a house they couldn’t afford.”
The government is offering loan servicers $800 for every homeowner they get into the plan.
Schiff predicts that loan agents “will be cold-calling people trying to get them into it. Just like they encouraged people to overstate their income to get a bigger loan in the first place, now they will encourage them to understate their income to qualify for a smaller loan.”
To prevent fraud, the government says a borrower “must certify that he or she experienced a hardship or change in financial circumstances, and did not purposely default to obtain a modification.”
Arizona Reverse Mortgages: Top 10 Home Improvements Seniors Make
According to an AARP survey found on the HUD.gov website, the majority of mid-life and older Americans want to remain living independently in their own homes and communities for as long as possible.
Nursing home? People don’t want to live in a nursing home, they want to stay in their own home!
The survey found that:
The FHA HECM reverse program can turn the built-up wealth in your home to cash without having to move or repay a loan each month. Financing home repairs or improvements is one of the many good uses for funds received from a HECM.
Top 10 Home Improvements for Seniors:
The above mentioned survey was part of a series of surveys done by AARP on senior housing studies. Based on telephone interviews of 2,000 persons aged 45 and over, it examines the opinions and behavior of mid-life and older Americans regarding their current and future housing situations.
A Few of Our Favorite Arizona Communities:
Ahwatukee Chandler Gilbert Mesa Maricopa Queen Creek Scottsdale Tempe Casa Grande
A Few of Our Arizona Reverse Mortgage Communities:
Phoenix | Tucson | Mesa | Scottsdale | Chandler | Tempe | Gilbert | Surprise | Sun City | Sun Lakes
Yuma | Kingman | Flagstaff | Sedona | Goodyear | Lake Havasu | Maricopa | Marana | Casa Grande | Prescott
Van Dyk Mortgage Corporation AZBKBR-0115143 Copyright © 2008 Arizona Mortgage Team