How To Avoid Paying Double Interest On FHA Streamline. Tips On FHA Streamline Refinance.

Tips On FHA Streamline Refinance.

What Is An FHA Streamline Refinance?
The FHA Streamline Refinance is a reduced-paperwork, verification-free, appraisal-less refinance program meant to lower a homeowner's monthly mortgage payment by 5 percent or more monthly. FHA Streamline Refinance is a special refinance program available only to homeowners with FHA-insured mortgages. Homeowners must be current on their mortgage to use the FHA Streamline Refinance, and must have made at least 6 payments on their FHA-insured loan in order to be eligible. 

The FHA Streamline Refinance is available in all 50 states and allows for loan sizes of up to $729,750 in certain high-cost areas including Loudoun County, Virginia; San Jose, California; and Montgomery County, Maryland. In high-cost areas in which multi-unit homes are common, maximum FHA loan sizes are even larger. In Brooklyn, New York, for example, a 3-unit home can be financed up to $1,129,250; financing for a 4-unit home is available up to $1,403,400.

The date you set your FHA Streamline Refinance closing matters. So, when should you close your FHA Streamline Refinance? The best time to close your FHA Streamline Refinance is absolutely at the end of the month.

Time Your FHA Streamline Refinance Closing
FHA Streamline Refinance can be one of the simplest, fastest refinance programs available. According to FHA guidelines, there is no appraisal to commission; no income to verify; and no credit to review (however, some lenders may ask for tax returns as a risk precaution). 

Although there is limited paperwork, and the nature of the product is easy-breezy, you do need to keep in mind that, in order to close on a FHA Streamline Refinance it requires attention to details. Specifically, refinancing homeowners should pay special attention to their expected mortgage closing date. 

You could be paying up to 30 days of prepaid mortgage interest which may be double-paid without your knowledge. This is because of an FHA rule which gives mortgage lenders permission to collect a full month of mortgage interest, regardless of whether the loan's been paid off prior to the month's end. This differs from a conventional refinance for which a mortgage lender will only collect through the payoff date. 

For example, assume you are a homeowner in Columbus, Ohio who is using the FHA Streamline Refinance to refinance a $250,000 mortgage; and assume your new FHA loan will fund on the 15th of the month.

· 15 days of per diem interest paid to new lender, to cover the rest of the month 

· 30 days of per diem interest paid to old lender, because the FHA prescribes it 

Funding an FHA Streamline Refinance on the 15th day of the month, would have you paying 45 days of mortgage interest for a 30-day month (a waste of 15 days of extra interest). Or, in this case, $360. If you fund the loan on 30th of the month, only 1 day of mortgage interest is paid to the new lender. This would save $335. 

Below are optimal 2013 FHA Streamline Refinance closing dates. You can use this as a guide to minimize your "double interest". These dates assumes that your home is your primary residence such that the 3-day right of rescission applies. If you're closings for FHA non-owner occupied properties, rental homes, and other properties not subject to the 3-day right of rescission should be scheduled for the last business day of the month.

· May 2013 : A Friday, May 24 closing will fund May 30, 2013

· June 2013 : A Monday, June 24 closing will fund June 28, 2013

· July 2013 : A Friday, July 26 closing will fund July 31, 2013

· August 2013 : A Monday, August 25 closing will fund August 29, 2013

· September 2013 : A Wednesday, September 25 closing will fund September 30, 2013

· October 2013 : A Friday, October 25 closing will fund October 30, 2013

· November 2013 : A Monday, November 25 closing will fund November 29, 2013 

· December 2013 : A Thursday, December 26 closing will fund December 31, 2015

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How To Get A Certificate Of Eligibility For A VA Loan

VA Loan Certificate of Eligibility – What Is It And How Do You Get It?
A VA loan is an incredible benefit offered to men and women of the armed forces who meet certain eligibility criteria. Not only are the benefits exclusive to veterans, they provide opportunities that you can’t get with other loans, like the ability to refinance your home up to 100% of its worth, no down payments on a home purchase, and much more.

To take advantage of the benefits offered by a VA loan, you have to prove you are eligible. In order to do that, you must meet certain guidelines.


To qualify for a VA loan, you must have one of the following requirements:

• Served 2 years during peacetime (Active Duty)   – Could be less if prior to 1974
• Served 180 days during war time (Active Duty) – WWII and Korean War vets need only 90 days
• Served 6 years in the Reserves or National Guard
• Surviving spouse of a service member who was killed in the line of duty

But in addition to meeting one of the above criteria, you must request a Certificate of Eligibility (COE) from the Veterans Association.

This form will ask you for information about your current living situation and your dates of military service. It is recommended that you provide your proof of service form along with the COE. This is the DD Form 214 (that you can obtain online if you do not have a copy).

COE REQUEST:            Certificate of Eligibility

DD214 REQUEST:        DD Form 214

If they were in the normal military you will need their DD214

If they are still active in the military you need a Select Service Letter from their Commanding Officer with their Full Name, SSN, Enlistment State Date, Enlistment End Date, and any Loss Time if applicable on military letterhead

If they were in the Reserves you will need their DD256 and Point Statement

If they were in the National Guard you will need their NGB-22

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Can A Person Have More Than 1 FHA Mortgage Loan?

More Than 1 FHA Mortgage Loan?

There are instances where a homeowner can have more than one FHA mortgage. Typically, FHA generally will not insure more than one mortgage for any borrower (transactions in which an existing FHA mortgage is paid off and another FHA mortgage is acquired are acceptable). Any person individually or jointly owning a home covered by a mortgage insured by FHA in which ownership is maintained may not purchase another principal residence with FHA mortgage insurance except under the situations described below. 


A. Relocations. If the borrower is relocating and re-establishing residency in another area not within reasonable commuting distance from the current principal residence, the borrower may obtain another mortgage using FHA insured financing and is not required to sell the existing property covered by a FHA-insured mortgage. The relocation need not be employer mandated to qualify for this exception. Further, if the borrower returns to an area where he or she owns a property with an FHA-insured mortgage, it is not required that the borrower re-establish primary residency in that property in order to be eligible for another FHA insured mortgage. 

B. Increase in Family Size. The borrower may be permitted to obtain another home with an FHA-insured mortgage if the number of legal dependents increases to the point that the present house no longer meets the family's needs. The borrower must provide satisfactory evidence of the increase in dependents and the property's failure to meet the family's needs. The borrower also must pay down the outstanding FHA mortgage (secondary liens do not need to be paid off or paid down) on the present property to a 75 percent or lower loan-to-value (LTV) ratio. A current residential appraisal must be used to determine LTV compliance. Tax assessments, market analyses by real estate brokers, etc., are not acceptable as proof of LTV compliance. 

C. Vacating a Jointly Owned Property. If the borrower is vacating a residence that will remain occupied by a co-borrower, the borrower is permitted to obtain another FHA-insured mortgage. Acceptable situations include instances of divorce, after which the vacating ex-spouse will purchase a new home, or one of the co-borrowers will vacate the existing property. 

D. Non-Occupying Co-Borrower. A non-occupying co-borrower on property being purchased with an FHA-insured mortgage as a principal residence by other family members may have a joint interest in that property as well as in a principal residence of their own with a FHA-insured mortgage. (See HUD Handbook 4155.1 for additional information). Under no circumstances may investors use the exceptions described above to circumvent FHA's ban on loans to private investors and acquire rental properties through purportedly purchasing "principal residences".

REFERENCE
HUD Handbook 4155.1: 4.B.2.c-d

DISCLAIMER

DISCLAIMER: All policy information contained in this post is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.

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Mortgage Pre-Approval

Mortgage Pre-Approval Basics
Mortgage pre-approval is a process in which the mortgage lender reviews your financial background (credit score, income, debts, etc…) in order to find out whether or not you're qualified for a mortgage loan in order to buy a home. Mortgage lenders will also tell you how much they are willing to lend you.

Getting pre-approved for a home loan, prior to shopping for a home, is absolutely essential and it benefits you in several ways. First, it helps you find a real estate agent. Most agents will only work with buyers who have been "vetted" by a lender -- and who can blame them? This process also helps you identity any financial problems that need to be fixed. If your credit score is too low, or you have too much debt, you'll find out about it during pre-approval. Last but not least, sellers will be more inclined to accept your offer.

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GFE Disclosure vs TILA Disclosure

GFE Disclosure vs. TILA Disclosure
When you apply for a mortgage refinance or purchase loan, the mortgage lender is required by law to provide upfront disclosures. In the upfront disclosures package, you will find, among other disclosures, the GFE (Good Faith Estimate) and the TILA (Truth in Lending Act).

The GFE Disclosure provides an estimate of settlement charges, a summary of the loan terms, and escrow account information while the TILA Disclosure provides information regarding the APR (Annual Percentage Rate), Finance Charge, Amount Financed and Total of Payments. Both the GFE and the TILA disclosures help protect consumers by illustrating the complete terms of a mortgage refinance or purchase transaction.

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