The FHA and HUD have updated some of the rules used to calculate maximum mortgage loan amounts for FHA Streamline Refinancing loans. According to Mortgagee Letter 2013-29, there are new guidelines to lenders on how the maximum amount is calculated, and what can be included in the loan amount when calculating the mortgage amount.
“Mortgagees are reminded that when processing an FHA-insured streamline refinance mortgage, the new maximum mortgage amount must always be calculated starting with the outstanding principal balance on the existing mortgage, not with the payoff amount for the existing mortgage.”
Borrowers should know the difference between the outstanding balance and the payoff amount. According to the Consumer Financial Protection Bureau (CFPB) official site, “Your payoff amount is how much you will actually have to pay to satisfy the terms of your mortgage loan and pay off your debt.”
How does the payoff amount differ from the outstanding balance? According to CFPB, “Your payoff amount is different from your current balance, which is the amount you owe as of the date of your statement. Your payoff amount also includes the payment of any interest you owe through the day you intend to pay off your loan, and it may include other fees you have incurred and not paid.”
There are other changes to the FHA Streamline Refinancing rules, including this clarification on mortgage insurance. According to the FHA mortgagee letter, “HUD is also taking this opportunity to clarify previously published guidance in Mortgagee Letter 2009-32 and HUD Handbook 4155.1 3.C.2.c regarding Annual Mortgage Insurance Premium (MIP) payments. Mortgagees are permitted to include up to two months of Annual MIP payments in the mortgage amount for all FHA-insured streamline refinance transactions, including streamline refinances without an appraisal.”
For more information on how these changes may affect a Streamline Refinance loan you want to apply for, contact the FHA directly by calling 1-800 CALL FHA.
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