How to get a Super Low Interest Rate without Moving

Take advantage of recent low interest rates (before they climb up again) by refinancing your FHA loan. Ask your lender (or mine!) about an FHA streamline refinance.

If you bought when interest rates were higher -- and many people have, since interest rates at the moment have not been so low since 50 years ago as they are today -- you may be keen to refinance and free up your monthly income. This refinance simply results in a lower interest rate.

Here are the details:

-- you don't need an appraisal
-- you don't need to verify income
-- you will pay a couple of hundred dollars for the service
-- you can't refinance a 30-year term into a 15-year term, you must trade apples for apples

Here are the basics:

-- your mortgage must already be FHA-insured
-- you, the borrower, must be current on payments
-- the refinance must result in a lowering of your monthly payments  and/or a conversion of an adjustable rate mortgage to a fixed-rate mortgage
-- not possible to do a cash-out refinance

Make sure to go with a lender who, first of all, doesn't play possum when you mention an FHA streamline refinance. Sometimes you may even find a lower interest rate when you refinance with a non-FHA (conventional) loan, instead.

No matter what kind of loan you get, always go with a lender who is willing to do the work for you, and who will exactly to the penny explain how, and to what extent, a refinance will advantage you: know all the details about the interest rate, costs to refinance, length of the term of the new loan, and whether it has a fixed or variable rate.

How FHA Loan Terms Change this Spring

Changes to FHA loans this spring and summer will make their terms more expensive, so time is of the essence to apply soon to keep your payments low.

Starting this June, FHA loans will require mortgage insurance to be held for the entire life of the loan, so if you're interested in getting an FHA loan at a lower cost to you, act now to start the process!

With an FHA insured loan, you (the buyer) pay 3.5% down, as opposed to the traditional 20% down on the cost of a house. In exchange for this low down payment, you must pay mortgage insurance. This monthly payment usually phases out when a buyer reaches a secure level of equity in the house. But all that will change June 3rd of 2013.

Instead, for loans begun with less than 10% down payment, the mortgage insurance premium will be required to be paid during the entire life of the loan, becoming a permanent part of the loan. 

There is still time to get an FHA mortgage (where the insurance premium gets phased out) before the June 3 rule change, by applying for an FHA loan and having the lender assign a case number for your loan before the deadline. But: in order to get a case number, which is assigned to a particular property, you must have an accepted offer on that property.

The closing date in this case is irrelevant, but the issuance of the case number is decisive.

In addition, the annual mortgage premium on new FHA loans (those with case numbers issued after April 1, 2013) will rise from 1.25% per year to 1.35% per year. 

How this all washes out is: the can't-get-out-of-paying-it mortgage insurance on an FHA will more than double over the whole term of a thirty year loan...if you apply (and don't have an accepted offer on a house) after June 1st, 2013. 

(But remember, a 10% or more down payment means you don't have to pay mortgage insurance at all...)

If you're interested in starting the process and finding a home, get in touch with me and I will set you up with a terrific lender who can pre-qualify you.