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 FHA Streamline and VA IRR Refinances This is a very popular way to lower interest rates, yet highly misunderstood by most FHA and VA lenders in Colorado. Make sure when researching this option to ask about a NO COST streamline refinance!
If you have an FHA or VA loan it may be eligible for a streamline refinance in Denver. This is a simple interest rate and optional term reduction to your current government loan. This HUD program has been around for many years, with guidelines allowing for a minimal qualification. If you can improve your situation by lowering your interest rate, payment, or length/term of loan on your current FHA or VA loan in Colorado –
How it works…
F.H.A Streamline and V.A Interest Rate Reduction loans are a relatively simple process, as they do not require full qualification.
There are some basic requirements for FHA streamlines:
- We will verify your ability to repay the mortgage
- You have to have made your last 12 payments on time, and be current when you close on the mortgage
- There is a 6-month waiting period after your last FHA mortgage closed (210 days)
- There must be a "net tangible" benefit (your principal / interest & mortgage insurance must go down 5%)
- An appraisal may be required if you are looking to add anything to your principal, interest (current month), and difference of your existing mortgage insurance refund and new upfront mortgage insurance
- Credit score - We will verify you have a minimum 640 FICO score
- If assets are needed to bring cash to closing, those must be verified
At or prior to closing you review the numbers and confirm that this is the loan you want, you sign another set of disclosures along with a new NOTE and Deed Of Trust, have a 3 day rescission period to review your documents and then your current FHA/VA loan is paid in full. The new mortgage is in place, you have a month before your first payment is due, this is usually referred to as ‘skipping a month’, which allows time for the new mortgage account to be set up.
To apply for an FHA streamline or VA IRRL click here
Available options (all require interest rate reduction);
30 YR Fixed -streamline to new- 30 YR Fixed –lower rate and payment.
30 YR Fixed -streamline to new- 15 YR Fixed –lower rate, payment, reduce years, interest & MI
15 YR Fixed -streamline to new- 30 YR Fixed –lower payment, extend term.
15 YR Fixed -streamline to new- 15 YR Fixed –lower rate and payment.
3 YR ARM -streamline to new- 30 YR Fixed –lock in fixed rate, potentially lower payment.
5 YR ARM -streamline to new- 30 YR Fixed –lock in fixed rate, potentially lower payment.
Call for other options…
Here is one example;
30 YR Fixed -streamline to new- 15 YR Fixed –lower rate, payment, reduce years, interest & MI
You purchased your home in June 2000 with an FHA 30 YR fixed rate loan at 7.00% (A.P.R 7.217). At that time it would have looked something like this;
Purchase price $200,000.00
Less 3.5% down payment $7,000.00
Add UPMIP (2.25%) $4,342.50
Principle balance of loan $197,342.00
Payment
Principle & Interest $1,313.07
Monthly MI $ 90.45
Total before escrows (taxes & insurance) $1,403.52
After 8 years of making scheduled payments…96 payments of $1,403.52… you have paid $105,604.41 of interest, and $24,252 of principal. You have a principal balance of $173,179 remaining, along with 264 more payments.
Why would it make sense to refinance after 8 years?
It will save you well over $70,000 in interest to streamline your current FHA 30 year fixed loan into a new FHA 15 year loan. You can reduce the term of your mortgage by 7 years, lower your interest rate, eliminate the monthly MI and keep your payment about the same. If you have made additional principal reductions over the years, your savings will be even greater.
How to check it out…
If you are interested in hearing more about one of these options, seeing your specific savings or have other questions; please contact me at 303-779-0591 X 101, or e-mail me. I look forward to speaking with you! Ray
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