Pre 2009 Streamline Refinancing

Mike from Orlando, Florida called into the show to ask Robert Palmer his advice on his current situation and get info on refinancing his FHA loan. He bought his house five years ago and was given a 6.5% interest rate originally, but was able to refinance the loan after seven months to get a 4.75% interest rate. Mike would like to refinance today to take advantage of the market's current low rates and is considering refinancing with a fifteen year loan and wants Robert's opinion.

Sounds like Mike can take advantage of a new refinancing program for pre 2009 FHA loan holders. This program allows for a reduced mortgage insurance premium. The program intends to help consumers who would like to refinance by keeping their current mortgage insurance payments. FHA mortgage insurance previously cost around .5% and has increased over the years to a 1.25%. Today's interest rates are significantly lower that they were in the past, but since the MI has gone up it could nullify any savings that refinancing would produce. FHA recognized this problem and came out with a streamline process for consumers that originally took out their loan before the year 2009. If there is enough equity in the property you would also have the option to refinance conventionally. In this situation for Mike, FHA sounds like the best option. The streamline refinance without a new appraisal is similar to the HARP program that came out for conventional loans to help borrowers who owe more money than their house is currently worth to refinance. With the streamline process the MI premium will remain at the borrower's current rate and FHA interest rates are as low as 3.75% with an APR of 4.1%, because of MI and other fees. At RP Funding we already pay all lender's fees and with this streamline program we also pay all third party closing cost allowing the consumer to keep their current balance.