Cashman: Refinance options for FHA borrowers
There is a little known opportunity for current FHA-financed homeowners to refinance into today’s record low interest rates without incurring the hefty Upfront Mortgage Insurance Premium that FHA charges on new mortgage loans.
The program also reduces the monthly mortgage insurance premium charged on FHA loans to a 0.55 percent factor as opposed to the 1.20 to 1.25 percent factor charged annually on new FHA loans.
Also, since the transaction is referred to as a “Streamline Refinance,” no appraisal is required. Value of the home is obtained from FHA based on the last transaction they made to take out their current FHA loan. Even if the current home value is less than the balance of the loan, it is not a threat to this type of transaction.
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