FHA’s version of HARP

Many qualified borrowers who have a mortgage owned/serviced by Fannie Mae or Freddie Mac are taking advantage of the new revisions to the Home Affordable Refinance Program (HARP).  Those qualified borrowers are able to refinance to today’s lower interest rates without having to get an appraisal done.  What this means is that those home owners can refinance to a lower rate, regardless of their equity position, so if they are “Under Water” (Wall Street’s term for owing more than what your home is worth), you can not only refinance to a lower rate, you’re not required to have mortgage insurance (PMI) if you don’t have it now.

Home owners with an FHA mortgage have always been able to obtain a refinance without an appraisal as part of the Streamline Refinance process, but HUD has recently come out with a new guideline that, in a way, ties in with HARP, at least as far as the required date that you closed your current mortgage.

Provided your current FHA mortgage received it’s FHA insurance endorsement (usually within a couple of weeks after closing) prior to June 1, 2009, you are not only eligible to obtain today’s low fixed rates, you are also eligible for reduce mortgage insurance.

FHA mortgages always require mortgage insurance, regardless of the down payment.  In April of this year, FHA increased the cost of that insurance.  The Up Front Mortgage Insurance (typically rolled into the loan) increased from 1.00% to 1.75% of the loan amount.  The monthly mortgage insurance (the MI portion of your monthly payment) went from .55% to either 1.20% or 1.25% depending on your down payment.  The new guideline for borrowers with endorsements prior to June 1, 2009 is that the monthly mortgage insurance remains at .55%, but the Up Front is a mere .10%.  Compared to someone purchasing with a new FHA mortgage, that’s a substantial difference.

With FHA rates ranging from 3.50 – 4.00% given the day and market conditions, refinancing with a streamline refi can save hundreds of dollars.  And since FHA streamline mortgages don’t require an appraisal, you’ll save time as well as money.  Not sure when your loan received it’s FHA insurance endorsement?  Your current lender or the company you’re applying with can get it for you.  Refinance today, reduce your monthly mortgage payment and then take the savings out into the world to stimulate our economy!