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Ideal time to streamline your FHA loan
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If you have a FHA insured loan - and virtually all first-time buyers who have purchased homes in Manteca during the last three years have them - you might just want to take advantage of the one-time ability to streamline your loan.

Deborah Romero of Ability Mortgage has seen a big uptick in re-refinance applications thanks to mortgage rates slipping below 4.5 percent - a level no one ever dreamed they’d reach.

It doesn’t mater whether you are underwater with your home being worth less than it is appraised at in today’s market. You must not have missed payments and you must have a good credit rating which means essentially being diligent about paying bills on time. The credit score - with verification of continued employment - opens the door to the process.

What will make or break the deal is whether you can reduce your payment by $50 a month and you can recover all of the fees wrapped into the new loan within 84 months. If you can’t do that then the streamline is a no go.

Typically it is roughly the cost of one month’s payment up front although there is a little hiccup on the horizon as the next twice-a-year property tax installment is due soon. That means loans going through right now would require the homeowner to have twice as much money upfront as they normally would.

But, as Romero said, if they have the money available they should go ahead and do it now or they can simply wait until the property taxes are paid out of their existing impound account with their current loan.

At any rate, once you re-finance your initial impound account will have money that you are due.

That means if you don’t have a lot of cash on hand you can still make it work and start saving a minimum of $50 a month if your loan situation qualifies. A loan officer will essentially do everything possible to make the cost upfront to you right around your existing monthly payment which you would skip as that is the payment that would start the new loan. It can come in a little more out of your pocket but not much.

Whatever additional costs you incur will come back to you with your impound account balance within 60 days.

In most cases of people who have just re-financed, it is as much as $1,000 back into your pocket. It’s your money, of course. And your new impound account will also be lower as it will probably reflect a lower assessment than your previous impound account.

Historically rates have had to drop about a full percentage point from your existing rate to make the FHA streamline refinance work.  In some cases where FHA loans were made at 5.75 percent just 30 months ago people are seeing their monthly payments slashed by $90 to $150 a month depending on how much they originally financed. And for those with loans above 6 percent, loan officers report putting as much as $250 back into the pockets of their clients each month.

You get one shot at an FHA streamline refinance with your home.

And this is absolutely best time to take that shot to lower your monthly housing cost.