FHA Guidelines for Delaware Streamline Refinances have some significant changes from mortgagee letter 2009-32

Revisions for ALL Streamline Refinance Transactions:

Seasoning:
At the time of loan application, the borrower must have made at least 6 payments on the FHA-insured mortgage being refinanced. In order to complete the refinance, you need to obtain an FHA Case # assignment but FHA will not assign the case # until after the appropriate amount of time has passed since you obtained the FHA loan.

Payment History:
At the time of the loan application, the borrower must exhibit an acceptable payment history as described below.

For mortgages with less than a 12 months payment history, the borrower must have made all mortgage payments within the month due.

For mortgages with a 12 months payment history or greater, the borrower must have:
Experienced no more than one 30 days late payment in the preceding 12 months, AND made all mortgage payments within the month due for the three months prior to the date of loan application.

Net Tangible Benefit:
The lender must now determine that there is a tangible benefit “as a result of the streamline refinance transaction, with or without an appraisal. Net tangible benefit is defined as:

• A reduction in the total mortgage payment (principal, interest, taxes and insurances, homeowners association fees, ground rents, special assessments, and all subordinate liens). The new total mortgage payment is 5 percent lower than the total mortgage payment for the mortgage being refinanced. For example, your total mortgage payment on the existing FHA-insured mortgage is $895; the total mortgage payment for the new FHA-insured mortgage must be $850 or less.
• Refinancing from an adjustable rate mortgage (ARM) to a fixed rate mortgage.

FIXED Rate to an ARM Rate:  Fixed rate mortgages may be refinanced to a one-year ARM provided that the interest rate on the new mortgage is at least 2 percentage points below the interest rate of the current mortgage.  If refinancing to a 5 year ARM then the payment only has to be less by 5 percent.

ARM to Fixed Rate:  The interest rate on the new fixed rate mortgage will be no greater than 2 percentage points above the current rate.

• Reducing the term of the mortgage. For example, going from a 30-year term to a 15-year term. For transactions that include a reduction in the mortgage term, that loan must be underwritten and closed as a rate and term (no cash-out) refinance transaction.

Credit:

Most individual investors now require a minimum credit fico score of 640.

Maximum Combined Loan to Value:

If subordinate financing is remaining in place, the maximum combined loan-to-value ratio (CLTV) is 125 percent. Subordinate financing is a 2nd mortgage that would be resubordinated back to a 2nd position behind the new FHA loan.

APPLY ONLINE today to be pre-approved for a mortgage to buy your first home in Delaware.

John R. Thomas – NMLS 38783

Certified Mortgage Planner – Primary Residential Mortgage, Inc.

302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office

248 E Chestnut Hill Rd, Newark, DE 19713