Blog with MAE Capital

Have you been thinking about refinancing your home and not sure if you want to go through the hassle?   Not sure what to expect or afraid you won’t qualify?  These questions are the typical questions facing home owners today and I am sure the major reasons they decide to procrastinate.  But if you think about it, how long will it take out of your day to make that simple phone call or complete a refinance questionnaire?  The answer is about 10 minutes, that’s shorter than a Geico phone call and could save you far more money.  We know you don’t this everyday so we try our best to make it as smooth as possible for you and answer all the questions you have.  So let’s to answer some of your questions in this post.

2015 has started with interest rates back in to the historic low levels with rates in the mid 3’s for 30 year fixed rate loans.  If that is not enough the government has lowered the FHA monthly mortgage insurance rates by .5%.  So a typical FHA loan that was taken out this time last year with an interest rate of 4 % with a loan balance of $250,000 would be a saving of $140 a month and all you would have to provide is a current mortgage statement, your home owner’s insurance policy, and a copy of your Note.  That is all you would need, no income verification, no bank account verification, no appraisal.  This is called a FHA Streamline Refinance by clicking on it will take you to the detail page.   The FHA Streamline loan only works when you have an existing FHA loan.  If you are a veteran, and have a VA loan on your home, the VA has a similar program called an Interest Rate Reduction Refinance Loan or IRRRL.  If you have a FNMA or FHLMC loan (a conventional 30 year fixed) the similar type of program would be the HARP program.  The HARP program or the Home Affordable Refinance Program is really designed for those home owners that owe more than their home is worth and wish to lower their monthly payments.  If you have equity in your home with a conventional loan on it, you would need to fully qualify again for a new loan. 

So what do you need worry about?  Nothing, the initial consultation with a MAE Capital Mortgage’s loan officer is free.  Over the phone or by completing a simple refinance form online we will get some basic information and formulate the best possible scenarios for you.  We will tell you if it is worth your time to do a refinance before you have to gather anything.  The information you send us, either online or over the phone, is secure and will not be used for spam or any other kind of mass marketing.  People have become wary of filling out anything online for fear they end up on some spam list that they can’t get rid of, that is simply not the way we want our clients treated. 

What do you need?  If we are not doing a FHA Streamline you will need to gather your Federal income taxes for the last 2 years and W2s, your current mortgage statement, your home owners insurance declaration page, bank statements for the last 2 months, and your last 30 days of pay statements.  Will do the rest for you, like open escrow, order an appraisal and process the paperwork.  It does not matter who your existing lender is, we are completely refinancing that old loan and you will have new mortgage company that you will make your payments to.  You might ask if it would be better to go to your existing lender to refinance your home, and in most cases it is no better and in some cases, I have seen the existing lender charge more and you end up with a slightly higher interest rate.  It is always good to get a few quotes, but make sure you talk with someone who can actually give you an accurate quote.  The interest rate on your new loan is based on several variables such as equity, credit score, loan program, and whether you are taking cash out to pay off a second mortgage or other debt.  So it is always best to have the rate calculated for you based on your situation.  Lenders and Brokers all have to go to the same places to get the rates for you, so rates should not vary that much from lender to lender, but the fees charged can.

So what happens when once you decided to start the process?  Once you have supplied the paperwork we have requested, we are tasked with providing you with disclosures that spell out all the charges and the payment on the new loan.  We will go to an Escrow or Title Company and order a preliminary title report to make sure there are no liens on the property that you did not know of.  We will order the appraisal (if necessary).  We will do all the necessary verifications of your employment, credit, and assets (if necessary).  Once we have everything back we submit the file to underwriting. When the loan is approved we draw the loan documents and send them to the Escrow or Title Company and have you sign them.  Most of the time we can arrange that you sign in our offices, if that is more convenient, or we can have a notary come to your home, or you can go to the Escrow or Title Company to sign them.  Once you sign the documents, they are set back to the lender to be reviewed.  Then the new loan is funded and the old loan is paid off through the Escrow.  You new first payment will be the following month.

What will this cost me?  In most cases we make the new loan where you have no out-of pocket expenses.  This is done either within the interest rate you decide to take or included in the loan amount or both.  This is done upfront before you make a decision to refinance and is part of the analysis we do to make sure it will be a good investment to refinance.  A general rule I like to follow is to find out how long you plan on being in the home and fit the loan that plan.  An example would be if it costs $5,000 to refinance, either included in the loan or paid in cash, and you save $250 a month in your payment, it will take 20 months to recoup that amount to make it worth the refinance.  But if you plan on selling your home in that time frame it is not worth it.  On a FHA Streamline the loan amount can’t be raised so the analysis is easy, if you save money it is worth it to do. 

So how do you get started?  Well that is easy simply give us a call, it is free, and could save your thousands of dollars.  Our phone number is (916) 672-6130 or Click Here and fill in the simple questions and we will contact you.  We can only refinance California properties as that is where we are licensed to do business.  

Posted by Gregg Mower on February 3rd, 2015 1:20 PM

You might have heard of a Streamline Refinance with regards to your current mortgage but you may not know exactly what it means to you and your ability to refinance your home.  Let’s start by definition of what a Streamline Refinance means to a lender and ultimately you.   This term was actually coined by FHA when they came up with a refinance program to help those with high interest rates and a good payment history to reduce their monthly mortgage payments.  Initially the Federal Housing Administration (FHA) came out with this program in the early 1980’s to help home owners, who had existing FHA loans and had made the payments on time for the last 12 months, lower their monthly payments without having to go through the hassle of an appraisal and income verification.   Thus, the streamlined process of getting your FHA loan refinanced.  Although, this very loan exists today it has evolved into many different hybrid ways of accomplishing the same results. 

A FHA streamline refinance today varies only with the onset of credit scoring.  Lenders have adopted different interest rate levels for FHA streamline refinances and they all revolve around the credit score of the borrower.  Although the credit score is not a requirement of a Streamline refinance it does, however, provide for better interest rates if the borrower allows the lender to pull a credit score and that score is greater than 640.  The lender will have to verify that the mortgage has been paid on time for the last 12 consecutive months in order to qualify for the streamline program anyway, and that can be done on a credit report with a score, or it can be done with a mortgage only report that shows only the mortgage history, or the borrower can provide 12 consecutive months of cancelled checks showing the mortgage paid on time.  Bottom-line is; if you have made your payments on time for the last 12 months, and you have an existing FHA loan you will qualify for a Streamline Refinance Program. 

The next part of the FHA Streamline Loan that makes it unique is the fact that there is no appraisal required.   This is helpful for not just the cost and time an appraisal takes but it if your home’s value has decreased at all, having no appraisal will allow you to refinance even if your house is valued at less than what you owe.   The appraisal could also, potentially, bring up work that may need to be done on your home before you could obtain financing.  It generally takes a week or two to get an appraisal, so without that time in the process the loan can be done a lot faster.

No income verification is a big part of the streamline loan.  Although, you must be employed either by an employer or self-employed, you don’t have to income qualify.  What that means is, simply, the amount of income you receive monthly does not matter to the qualifications required to do a streamline refinance.  In a normal full qualifying loan your total monthly bills and house payment should not exceed 45% of your total gross monthly income.  With a Streamline refinance this process does not take place.   The idea is; if you have paid your mortgage on time at the higher rate than you should be able to pay your mortgage on time at the lower rate.  This is actually smart thinking and to think it came from our government, of course with the industry’s help.

Streamline Refinances are not limited to FHA, although they are the ones that coined the phrase.  You may have heard the term used with VA and Conventional loans.  This is somewhat true but they are actually called by different names.  The VA streamline loan is called an Interest Rate Reduction Refinance Loan or IRRRL.  This works on the same premise as the FHA Streamline, the major difference is that you need to be a Veteran to qualify for this and you must be refinancing an existing Veterans Administration Loan or VA loan.  The IRRRL still has no appraisal or income verification requirements similar to FHA.  The Conventional Streamline really does not exist in the true form like the FHA streamline and the VA IRRRL loans.  The conventional version is called a Home Affordable Refinance Program or HARP.  The HARP loan is designed to help those folks who owe more than their home is currently valued at.   The HARP Loan is designed to allow a home owner refinance to a lower rate if their home is valued less than the amount of the loan.  You will need to have an appraisal and you will need to income qualify for this type of loan as well as having made your payments on time for the last 12 months.  The HARP loan will only work for loans that are secured by the Federal National Mortgage Association (FNMA), or secured by the Federal Home Loan Mortgage Corporation (FHLMC).  The only way you can know if your conventional loan has been secured by either of these two Government Sponsored Enterprises (GSE) is to go to their website and enter your name and address and the last 4 digits of your social security number and the site will let you know if your mortgage qualifies for the program.  If you know your original loan was a “Jumbo Loan” when you first took it out, chances are your loan will not qualify for the HARP program.

We now know that the term “Streamline Refinance” has been used for other types of refinancing other than the original intend from FHA.   On our Streamline Refinance FHA page, on this site, you can get the details you need to know about FHA Streamline refinances and the mortgage insurance cut-off dates.  You can also go to our VA Interest Rate Reduction Refinance Loan or IRRRL page and learn more of the documents and requirements needed to get one of these loans.  Our HARP page has the links to FNMA and FHLMC sites to see if your loan qualifies for these programs.  This article is designed as an overview of the different types of Streamlines Refinances available in today’s world.  We look forward to assisting you with your refinancing needs and questions.  You are welcome to respond to this article or go to any page within our site and provide your information securely and we will give you a free analysis of your current mortgage.  Or call directly at (916) 672-6130.

 

Posted by Gregg Mower on December 2nd, 2014 3:42 PM

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