FHA Borrowers to Refinance with No Appraisals
More FHA Borrowers to Refinance without Appraisals
The Obama administration announced March 6 that the Federal Housing Administration would reduce fees that have prevented some FHA borrowers from refinancing at ultra low rates over the past year, The Wall Street Journal reported.
The change will reduce fees through what’s known as a “streamline” refinance, which is reserved for FHA borrowers who refinance into another FHA-backed mortgage. The process does not require borrowers to verify income, employment or credit — and it does not require a new appraisal, which means that underwater borrowers can refinance, the Journal reported.
Many borrowers who have FHA-backed loans have been unable to do a streamline refinance because of increased FHA insurance premiums — the high premiums offset low interest rates.
The latest FHA changes will address that problem by reducing the upfront insurance premiums borrowers must pay from 1 percent of the loan balance to .01 percent. The FHA also will drop annual premiums from 1.15 percent of the loan balance to 0.55 percent.
Streamline refinances are available only to borrowers who took out loans before June 1, 2009, and have made all of their last 12 mortgage payments. The White House expects the changes to help between 2 and 3 million borrowers refinance, the Journal reported.