FHA Streamline Refinance

IN the middle of February, 2011, FHA published yet another mortgage letter.  This time they're announcing that the FHA Streamline Refinance Program is going back to being streamlined.  Again, no more employment verification, no more credit verification, no more income verification.

To refinance with the FHA Streamline Refinance Program you still need to have been on time with the last 12 mortgage payments, there still has to be a 'net benefit' and you still can do it without a new appraisal.

By 'net benefit' FHA means you either are refinancing from an variable rate mortgage into a fixed mortgage or else your monthly payments are going to be 5% lower, at least.

So, you could have a credit score lower than my IQ (and that's low), have no job, no savings, and you qualify.

In case you're wondering, FHA benefits.  Reducing people's mortgage payments increases the chances that they won't default.

I say the FHA Streamline Refinance Program is a smart thing to do from their point of view.  They found a win-win program.

Foreclosures and Home Insurance

When you buy a home using a mortgage loan, you're required to carry homeowners insurance. (If you're in the Chicago area, this is a good place to get home insurance from.)  But what happens if you're in foreclosure? 

Obviously, even if you're in foreclosure, you should still pay the premiums (if for no other reason, because the process takes a long time and the home is still yours and you signed that you will).  But what if you can't afford it anymore?  Do lenders take over?

Of course they do.  They have the option to buy home insurance that names them the beneficiary or just paying the insurance that you have.  It seems they do the latter.  Of course, I only have anecdotal information.

But it struck me as an interesting question.

Mortgage Brokers

At the beginning of this month, the way mortgage brokers  can get paid has change: no more yield spread premium.  In other words, mortgage brokers can no longer get paid more if the interest rate on your loan is higher. 

I have the feeling that overall, this change will be an improvement and that some mortgage brokers will find a way to get paid more some other way.


The honest way would be to say upfront, my fee is $x and have to sell themselves based on their services, number of happy customers. 

I spoke to one mortgage broker who's happy about this change.  He's just outside Chicago, in Glenview, thinks he's good so anything that makes it harder on others is better for him.  And he thinks some people will end up leaving the business.  Not he.

Me, as I said, I think the change will be good overall.  But I'll expect some to find some other way to make more money.

What do you think?

Current Mortgage Interest Rates - Lowest Mortgage Interest Rates and Bad Credit Mortgage Refinancing

When you see 'Current Mortgage Interest Rates' all over the internet advertising very, very low rates, in the 3.5%-4% you're tempted to refinance or remortgage.

And for most people that's a good idea.  Because, yes, low mortgage payments do hand-in-hand with low interest rates.

But if you have bad credit, remortgage later might be an even better deal.

How do you know your bad credit remortgage is better put off?  First, you need to figure out the direction in which the interest rates are moving.  And the speed.  Then you need to take a look at your credit report.

Unless interest rates are moving up rapidly, take a look at your credit report.  It doesn't happen over night, but credit standing can be improved significantly, from a mortgage point of view with little effort.

The first thing everyone's tells you to do is to challenge inaccuracies.  Usually, they don't tell you that a few months of on-time payments can make a big difference to the mortgage interest rates you can get.

A few months of on-time payments can bump you up into the next level.

There isn't much difference between, say, a credit score of 560 and 579, but there's a big one between 560 and 680,thought the difference is one point.

Mortgage lenders have different programs for different credit scores, so being above the cutoff point level is important.

Here's the credit score breakdown:

720-799 Credit Score is considered great credit.

680-719 Credit Score is considered good credit.

620-679 Credit Score considered okay by many creditors but not all.

580-619 Credit Score is considered to be bad, below average.  Many mortgage lenders consider you 'subprime material' so you have to get a bad credit mortgage .

500-579 Credit Score is considered to be ugly.

499 and Below Credit Score is considered to be  very ugly.

Every 1% added to the very low current mortgage interest rates you see adds a lot of money to your monthly mortgage payments.

So, if your credit scores are low, if property values are stable or increasing, and the current mortgage interest rates aren't likely to shoot up, you're better off waiting to refinance till you've improved your credit scores.  That's usually the case even if interest rates are going up a bit.

If the current mortgage interest rates ARE going to shoot up, hurry and refinance.