FHA Refinance Questions You Should Be Ready To Answer

Now more than ever the FHA loan is the best loan out there for many reasons

Homeowners enjoy the benefits of investing in their property year after year. For some, there comes a time when that investment can come in handy. Refinancing with an FHA loan can prove to be an effective way to put that equity to work.

Sending a child to college, consolidating bills, taking a much needed vacation, or making home improvements are some of the ways homeowners tap into the equity they have accumulated in their home to help with these expenses. Keep in mind that FHA refinancing is only available to homeowners who are currently using their home as their principal residence.

FHA Refinance Questions You Should Be Ready To Answer

When you decide to apply for an FHA refinance loan, there are several questions you’ll need to answer to set the approval process in motion. Some questions are about planning issues, others are directly related to whether or not an FHA refinance loan is for you.

WHAT KIND OF FHA REFINANCING DO I NEED?

If you have a conventional home loan, an FHA refinancing mortgage is the product for you. If your home loan is an FHA mortgage, you can apply for an FHA Streamline mortgage. These FHA loans are much faster and easier to apply for since you are already in the FHA loan system. You don’t need to go shopping for a conventional home mortgage refinancing package if you qualify for an FHA Streamline loan.

IS MY LENDER WILLING TO HELP ME REFINANCE OR SHOULD I SHOP AROUND?

FHA refinancing loans are offered by participating lenders—they aren’t available at every bank. If your loan officer says your current bank doesn’t want to pursue FHA refinancing options in your case, shop around for a participating lender who can help.

HAVE I EVER FILED FOR BANKRUPTCY?

If you have filed for bankruptcy, don’t assume you can’t be approved for an FHA refinancing loan or an FHA Streamline loan. While filing for Chapter 7 or Chapter 13 bankruptcy doesn’t look good on a credit report, in many cases if you have made your payments on time and have lived up to the terms of your bankruptcy agreement, an FHA refinancing loan may still be possible. Never assume your case is hopeless. Make your payments on time, stay current, and talk to your loan officer about your specific circumstances. You might be surprised at what you learn.

WHAT IS MY CREDIT SCORE?

When applying for an FHA refinance mortgage, some lenders will ask you to rate your own credit, while others may simply do a credit check. If you have bad credit, you aren’t automatically disqualified from an FHA refinance loan. FHA mortgages are intended to help people get into and keep their homes; if you have been making on-time payments and your overall pattern of credit shows you’ve been diligent, you can still be considered for a refinancing loan through the FHA. Those who fell on hard times when the economy grew bad may find a second chance thanks to an FHA mortgage refinancing package. Don’t assume you shouldn’t apply—let your loan officer work with you to determine the best way to proceed.

HOW MUCH OF MY INCOME GOES TOWARD MY CURRENT MORTGAGE?

The amount of your current income and the amount you pay for your existing mortgage are very important. Be ready with exact figures and don’t forget to include any extra income you might be bringing in from a part-time job or your spouse’s income.

WHAT KIND OF PROPERTY DO I OWN?

One requirement for an FHA refinance loan is that you occupy the property you are refinancing. This requirement isn’t an issue when you take out a typical mortgage on a property, but once you begin applying for FHA loans and refinance loans, you’ll find the occupancy requirement is a key issue. In some case you may be able to get refinancing on a multiple-occupant home such as a duplex or condominium; these instances are covered by rules specific to each FHA refinancing program.

There are many differences between FHA Streamline refinancing and refinancing from a non-FHA mortgage into an FHA loan. Streamline loans, for example, may not require a new appraisal while an FAH refinance loan on a property purchased with a conventional mortgage may require a re-appraisal in some cases. Ask your lender about your specific needs.

HVCC AND AVERAGE PERSON!!

 

As a mortgage professional I deal with HVCC and how it pertains my industry every day. We adapt to the ever changing world of real estate all the time….However what about the first time home buyer, what about the family who desperpartly needs to consolidate debt, what about the family who was suckered into to a variable rate by some fast talking former used car salesman..What about the family that needs to sell their home and buy a bigger or smaller home….What about those people…Well those people are hearing ”NO WE CANT HELP YOU” every day from professionals they have given the trust of the biggest investment of their life!! 

Well in today’s  blog I would like to educate you help you to understand a little bit about HVCC what it is and how it affects you! 

After an investigation by New York Attorney General, Andrew Cuomo into Fannie Mae and Freddie Mac Appraisal practices, the agencies (with the Office of Federal Housing Enterprise Oversight (OFHEO)) agreed adopt new changes to how appraisals are processed in the mortgage industry in exchange for an end to the investigation. The centerpiece of the agreement is the HVCC, which contains many positive and common sense initiatives to help clean up the industry, but also contains significant negative changes to the how brokers and agents are able to work with appraisers and how appraisers are able to operate, hurting consumers, mortgage brokers, agents, and appraisers. 

Here is the break down…. 

Brokers (or anybody compensated on a commission basis upon the successful completion of a loan) may not choose appraisers to be used for loans they originate and may not engage in any communication with appraisers. Choosing appraisers and all communication with appraisers is delegated to lenders. This means that brokers are not only not allowed to choose appraisers based on quality of work and professionalism, but ultimately lose control of an integral part of the loan origination process, possibly increasing loan funding times and increasing costs to the consumers in the form of longer rate locks and the need to order new appraisals if there is a change of lender. 

2. Since appraisals are made in the lender’s name and not the broker’s, if the broker chooses a new lender for the deal, a completely new appraisal will need to be ordered. This increased consumer costs and the time involved in the transaction. 

3. All relationships with appraisers are rendered meaningless overnight. 

4. Brokers lose control over transactions and are put at disadvantage as power is shifted toward and biased towards large institutions. 

What it means to Appraisers: 

1. Must use AMC’s (appraisal management companies), meaning independent appraisers are forced to join and AMC and give 40% or more of their income to the AMC. You read that correctly, this will deprive independent appraisers of nearly 50% of their income in most cases (this could likely mean many experienced appraisers will leave the industry altogether). AMC’s are not regulated, by the way. 

2. Unfairly targets appraisers, does not affect AVM’s (Automated Valuation Models) and BPO’s (Broker Price Opinions). This not only hurts appraisers as Lenders may prefer unregulated and unrestricted alternatives that are not included in the HVCC and in a manner which is in contrast with the stated purpose of HVCC. 

3. Disallows appraisers from engaging in ANY communication with mortgage brokers, loan officers, agents, or others that may receive a commission upon funding of a deal. This means appraisers are not allowed to talk to their clients, a restriction no placed on any other industry to date. This means all the client relationships they have built are rendered meaningless overnight, an unprecedented act against any industry segment to date. 

What it means to Consumers: 

1. Higher Costs: If there is a need to change lenders or brokers as a new appraisal will be necessary. 

2. Increased time to fund loans as brokers lose control of choosing and managing appraisals and may necessitate longer rate locks or extensions of existing locks. In the case that a new lender or broker is chosen, a new appraisal will be necessitated, increasing time to funding. 

3. Decrease incentive to change lenders or brokers if they are not getting the service they deserve due to increased costs and time involved……. 

YOU CAN STOP THIS…LET YOUR ELECTED OFFICALS KNOW THAT  THIS AFFECTS YOUR LIFE IN NEGITIVE WAY…. 

Don’t get me wrong I believe improvement was needed however done this way hurts everybody!!! 

Please Check out my Charity and visit the links listed on this this blog. 

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