The official White House You Tube channel posted a video on April 18th, 2012, detailing the President’s plan for refinancing for borrowers.
According to the YouTube post, “Brian Deese, Deputy Director of the National Economic Council, explains how President Obama’s plan would make it much easier for millions of American homeowners to refinance their mortgage and save hundreds of dollars every month.”
This plan has been proposed, but has not been passed by Congress. As described in the video (see below at the end of this blog post), there are many advantages to refinancing, and the Obama plan would, if passed, offer more options for borrowers who need lower monthly payments and lower interest rates.
But in the meantime, many FHA borrowers need refinancing and can’t afford to wait to see what Congress might do. The FHA official site lists refinancing options, which include, “streamline refinances of existing FHA-insured mortgages made with or without appraisals, no cash out refinances (rate and term) of conventional and FHA-insured mortgages, where all proceeds are used to pay existing liens and costs associated with the transactions, and cash out refinances.”
A borrower who needs FHA refinancing can apply through any participating FHA lender. If you’re considering an FHA refinancing loan, you should know that FHA rules state the “maximum term of any refinance with an appraisal is 30 years. The maximum term of a streamline refinance without an appraisal is limited to the lesser of the remaining term of the existing mortgage, plus 12 years, or 30 years.”
When an appraisal is done on a property to be refinanced, it’s valid for six months, but according to FHA loan rules, “appraisals cannot be reused during the six month validity period once the mortgage for which the appraisal was ordered has closed, or for a subsequent refinance, even if six months have not passed. A new appraisal is required for each refinance transaction requiring an appraisal.”
HUD 4155.1 includes the rules for FHA refinancing loans. Those rules include specific instructions to lenders on refinancing situations where there may be a loan delinquency or skipped payment.
According to FHA requirements for Streamline and Cash-Out refinancing loans, “The borrower must be current on the loan being refinanced for the month due prior to the month in which he/she closes the refinancing, and for the month in which he/she closes.”
“Example: If the borrower is closing on April 8, he/she must have made the March payment within the month of March, and the April payment by closing. The April payment may be included in the payoff amount at closing. Lenders are not permitted to allow borrowers to