WASHINGTON — The Obama administration’s new plan to stimulate refinancings of FHA mortgages is likely to help large numbers of homeowners cut their monthly costs — even those who are deeply underwater. But it’s also likely to be a disappointment to many borrowers who aren’t aware of the program’s fine print and end up missing an opportunity to switch into a loan with a rate below 4 percent.
To cut through the bureaucratic details, here’s a quick overview of the so-called “streamline re-fi” program and what it will take for you to qualify. First, the baseline criteria: Your current home loan must be FHA-insured and must have been put on the agency’s books no later than May 31, 2009. If you have a mortgage owned or backed by Fannie Mae, Freddie Mac, the Department of Veterans Affairs or private investors, you’re out.
The May 31, 2009, date is crucial. Your lender can tell you precisely when the FHA “endorsed” your loan for insurance. This is different from the dates you applied for your loan or closed on your house. If it turns out to be anytime later than May 31, 2009, you miss the cut.
You also need to have an unblemished record of on-time mortgage payments for the past 12 months. Maybe you were late occasionally a couple of years back.
That’s OK. But the immediate past 12 months need to be pristine.
On top of that, if your refinancing does not provide you a net savings of at least 5 percent in your monthly principal, interest and mortgage insurance payments, you won’t be eligible either. The program won’t take effect until June 11.
Read more here: http://www.miamiherald.com/2012/03/18/2697633/check-the-fine-print-on-fha-re.html#storylink=cpy
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