Jumbo FHA Buyers…Your Jumbo FHA purchase may be ready to refinance by fall

Interest RateAll the FHA Jumbo loans that have are funded at rates considerably higher than the standard FHA pricing will soon be eligible for one of the best perks of the FHA loan…the streamline refinance! Later this year, when presumably FHA will get the permanent lift on standard FHA loan limits to what most think will be at least $550,000, there will be many borrowers that will want to streamline into standard FHA pricing reducing their interest rate and current payment.


Due to the perks of FHA, these borrowers will be able to avail themselves of the lower standard rates, regardless of their home’s value at that time and regardless of their credit score, income or employment status.


Why? Because Streamline Refinances (FHA to FHA no cash out refinance) do not require re-qualifying.  Streamline refinances do not require a credit report. And, you do not need to supply an appraisal, so value and LTV’s to not have to be taken into consideration. They are one of easiest loans to process in the market place today. No income documentation, credit report or appraisal, makes for a very light file. The pricing is the same as a purchase transaction. If you do not want to supply an appraisal, your new base loan amount can’t exceed the current principal balance. You CAN increase the new base loan amount to finance some closing costs, but you will then need to supply an appraisal and you will need to comply with the 97.15 ltv limit.


One thing you will need is twelve months of on time mortgage history. The history can be a combination of the FHA loan and a previous non FHA loan. You can document with a VOM or 3 bureau credit report addressing just mortgage history. If your client doesn’t have 12 months mortgage history, you could still do a regular refinance with qualifying or they can wait it out.


When doing streamline refinances, it is important to remember that you the borrower will get a partial refund of the UFMIP they paid in the last transaction to help offset the new UFMIP (if it’s been less than 3 years since original FHA was funded).


Advise your client that a streamline refinance may be doable in the near future, if their loan amount is between $362,790 & $550,000. Make sure you stay in contact with these borrowers for the inevitable refinance that will happen. Let all your FHA borrowers know of this inherent perk of the FHA loan, the streamline refinance.  Never before have the benefits of this built in feature been more apparent, than in this lending environment.  Make sure you are the one there to help your client and deliver the professional service you do.

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